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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0.25in"><b>As filed with the Securities
and Exchange Commission on January 23, 2025</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right"><b>Registration No. 333-&#8239;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</b></p><div>

</div><!-- Field: Rule-Page --><div style="margin-top: 0pt; margin-bottom: 0pt; width: 100%"><div style="font-size: 1pt; border-top: Black 2pt solid; border-bottom: Black 1pt solid">&#160;</div></div><!-- Field: /Rule-Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>UNITED STATES</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>SECURITIES AND EXCHANGE COMMISSION</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Washington, D.C. 20549</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Form <ix:nonNumeric contextRef="c0" name="dei:DocumentType" id="ixv-31195">S-1</ix:nonNumeric></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>REGISTRATION STATEMENT</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Under</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>The Securities Act of 1933</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><ix:nonNumeric contextRef="c0" name="dei:EntityRegistrantName" id="ixv-51"><b>EON Resources Inc.</b></ix:nonNumeric></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">(Exact name of Registrant as specified in its charter)</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: top"> <td style="border-bottom: black 1.5pt solid; width: 32%; text-align: center"><ix:nonNumeric contextRef="c0" format="ixt-sec:stateprovnameen" name="dei:EntityIncorporationStateCountryCode" id="ixv-61"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Delaware</b></span></ix:nonNumeric></td> <td style="width: 2%; text-align: center">&#160;</td> <td style="border-bottom: black 1.5pt solid; width: 32%; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>1311</b></span></td> <td style="width: 2%; text-align: center">&#160;</td> <td style="border-bottom: black 1.5pt solid; width: 32%; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>85-4359124</b></span></td></tr> <tr style="vertical-align: top"> <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(State or other jurisdiction of</span></td> <td style="text-align: center">&#160;</td> <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(Primary Standard Industrial</span></td> <td style="text-align: center">&#160;</td> <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(IRS Employer</span></td></tr> <tr style="vertical-align: top"> <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">incorporation or organization)</span></td> <td style="text-align: center">&#160;</td> <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Classification Code Number)</span></td> <td style="text-align: center">&#160;</td> <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Identification No.)</span></td></tr> </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>3730 Kirby Drive, Suite 1200</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Houston, TX</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>(713) 834-1145</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">(Address, including zip code, and telephone number,
including area code, of Registrant&#8217;s principal executive offices)</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Dante Caravaggio</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Chief Executive Officer</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>3730 Kirby Drive, Suite 1200</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Houston, TX</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>(713) 834-1145</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">(Name, address, including zip code, and telephone
number, including area code, of agent for service)</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Please send copies of all communications to:</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Matthew Ogurick, Esq.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Pryor Cashman LLP</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>7 Times Square</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>New York, New York 10036</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>(212) 421-4100</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Approximate date of commencement of proposed
sale to the public:</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>As soon as practicable after the effective date
of this Registration Statement.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If any of the securities being
registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, check the following
box: &#9746;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If this Form is filed to register
additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration statement for the same offering. &#9744;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If this Form is a post-effective
amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same offering. &#9744;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If this Form is a post-effective
amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same offering. &#9744;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Indicate by check mark whether
the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging
growth company. See the definitions of &#8220;large accelerated filer&#8221;, &#8220;accelerated filer&#8221; and &#8220;smaller reporting
company&#8221; in Rule 12b-2 of the Exchange Act.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: top"> <td style="white-space: nowrap; width: 20%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Large accelerated filer </span></td> <td style="white-space: nowrap; width: 35%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9744;</span></td> <td style="white-space: nowrap; width: 30%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Accelerated filer </span></td> <td style="white-space: nowrap; width: 15%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9744;</span></td></tr> <tr style="vertical-align: top"> <td style="white-space: nowrap"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonNumeric contextRef="c0" format="ixt-sec:entityfilercategoryen" name="dei:EntityFilerCategory" id="ixv-31196">Non-accelerated filer</ix:nonNumeric> </span></td> <td style="white-space: nowrap"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9746;</span></td> <td style="white-space: nowrap"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Smaller reporting company </span></td> <td style="white-space: nowrap"><ix:nonNumeric contextRef="c0" format="ixt:fixed-true" name="dei:EntitySmallBusiness" id="ixv-194"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9746;</span></ix:nonNumeric></td></tr> <tr style="vertical-align: top"> <td colspan="2" style="white-space: nowrap">&#160;</td> <td style="white-space: nowrap"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Emerging growth company </span></td> <td style="white-space: nowrap"><ix:nonNumeric contextRef="c0" format="ixt:fixed-true" name="dei:EntityEmergingGrowthCompany" id="ixv-201"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9746;</span></ix:nonNumeric></td></tr> </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If an emerging growth company,
indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. <ix:nonNumeric contextRef="c0" format="ixt-sec:boolballotbox" name="dei:EntityExTransitionPeriod" id="ixv-31197">&#9744;</ix:nonNumeric></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b>The Registrant hereby amends
this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further
amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a)
of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Commission acting
pursuant to said Section 8(a) may determine.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="margin: 0pt">&#160;</p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="color: Red"><b>The information in
this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed
with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting
an offer to buy these securities in any state where the offer or sale is not permitted.</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="color: Red">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="color: Red"><b>SUBJECT TO COMPLETION</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>PRELIMINARY PROSPECTUS DATED JANUARY 23, 2025</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>EON Resources Inc.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Up to 5,079,050 Shares of Class A Common Stock</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">This prospectus relates to
the offering from time to time by the selling securityholders named in this prospectus (the &#8220;Selling Securityholders&#8221;) of
up to an aggregate of 5,079,050 shares of our Class A Common Stock, par value $0.0001 per share (&#8220;Class A Common Stock&#8221;),
consisting of (i) up to 5,000,000 shares of Class A Common Stock (the &#8220;ELOC Shares&#8221;) that we may sell to White Lion Capital,
LLC (&#8220;White Lion&#8221;), from time to time at our sole discretion, pursuant to the common stock purchase agreement dated October
17, 2022 (as amended, the &#8220;Common Stock Purchase Agreement&#8221;), (ii) 69,050 shares of Class A Common Stock issued to certain
Selling Securityholders in exchange for forgiveness of accounts payable (the &#8220;Exchange Shares&#8221;), and (iii) 10,000 shares of
Class A Common Stock issued to a certain Selling Securityholder in exchange for targeting and research services (the &#8220;Service Shares&#8221;).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The shares of Class A Common
Stock being registered for resale were issued to, purchased by or will be purchased by the Selling Securityholders for the following consideration:
(i) a purchase price yet to be determined for the ELOC Shares (as described herein), (ii) a purchase of price of $1.00 per share of Class
A Common Stock for the Exchange Shares, and (iii) a purchase of price of $0.82 per share of Class A Common Stock for the Service Shares.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On November 15, 2023, we completed
the purchase of equity interests and transactions contemplated thereby (the &#8220;Purchase&#8221;) as set forth in that certain Amended
and Restated Membership Interest Purchase Agreement, dated August 28, 2023, as amended (the &#8220;MIPA&#8221;), by and among us, HNRA
Upstream, LLC, a newly formed Delaware limited liability company which is managed by us, and is a subsidiary of ours (&#8220;OpCo&#8221;),
and HNRA Partner, Inc., a newly formed Delaware corporation and wholly owned subsidiary of ours (&#8220;SPAC Subsidiary&#8221;, and together
with us and OpCo, &#8220;Buyer&#8221; and each a &#8220;Buyer&#8221;), CIC Pogo LP, a Delaware limited partnership (&#8220;CIC&#8221;),
DenCo Resources, LLC, a Texas limited liability company (&#8220;DenCo&#8221;), Pogo Resources Management, LLC, a Texas limited liability
company (&#8220;Pogo Management&#8221;), 4400 Holdings, LLC, a Texas limited liability company (&#8220;4400&#8221; and, together with
CIC, DenCo and Pogo Management, collectively, &#8220;Seller&#8221; and each a &#8220;Seller&#8221;), and, solely with respect to Section&#160;6.20
of the MIPA, HNRAC Sponsors, LLC (the &#8220;Sponsor&#8221;).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are registering the offer
and sale of the securities listed herein to satisfy certain registration rights we have granted.&#160;All of the securities being registered
for resale, when sold, will be sold by the Selling Securityholders.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are not selling any Class
A Common Stock under this prospectus and will not receive any of the proceeds from the sale or other disposition of shares by the Selling
Securityholders except we may receive proceeds from the sale of the shares to White Lion under the Common Stock Purchase Agreement, from
time to time in our discretion after the date the registration statement that includes this prospectus is declared effective and after
satisfaction of other conditions in the Common Stock Purchase Agreement. The purchase price to be paid by White Lion for any such shares
will equal 96% of the lowest daily volume-weighted average price of Class A Common Stock during a period of two consecutive trading days
following the applicable Notice Date.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We filed a registration statement on Form S-1 (File No. 333-275378) that became effective on August 9, 2024, which registered for resale
up to 5,000,000 shares of Class A Common Stock that may be sold to White Lion from time to time (the &#8220;Prior Registration Statement&#8221;).
We have sold approximately $4.9 million in shares of our Class A Common Stock pursuant to the Common Stock Purchase Agreement, and we
may receive proceeds of up to $145.1 million remaining under the facility from the sale of the shares of Class A Common Stock to White
Lion under the Common Stock Purchase Agreement. White Lion has resold 4,350,000 shares registered on the Prior Registration Statement,
with 650,000 shares remaining registered but unissued and not resold. It is the intention of the parties for White Lion to sell the remaining
shares from the Prior Registration Statement prior to reselling shares under the registration statement of which this prospectus is made
a part.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">White Lion is an underwriter
within the meaning of Section 2(a)(11) of the Securities Act.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Selling Securityholders may sell or otherwise dispose of the securities
covered by this prospectus in a number of different ways. We provide more information about how the Selling Securityholders may sell or
otherwise dispose of their securities in the section entitled &#8220;Plan of Distribution&#8221; on page 133. Discounts, concessions,
commissions and similar selling expenses attributable to the sale of securities covered by this prospectus will be borne by the Selling
Securityholders. We will pay the expenses incurred in registering the shares of Class A Common Stock covered by this prospectus, including
legal and accounting fees. We will not be paying any underwriting discounts or commissions in this offering to any person.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our Class A Common Stock is listed on NYSE American under the symbol
&#8220;EONR&#8221; and our Public Warrants are listed on NYSE American under the symbol &#8220;EONR WS&#8221;. On January 22, 2025, the
last reported sale price for our Class A Common Stock was $1.38. &#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As of January 15, 2025, there
were 12,895,544 shares of Class A Common Stock outstanding. If all shares being registered hereby were sold, it would comprise approximately
28.4% of our total shares of Class A Common Stock outstanding. Given the current market price of our Class A Common Stock, certain of
the Selling Securityholders who paid less for their shares than such current market price will receive a higher rate of return on any
such sales than the public securityholders who purchased Class A Common Stock in our initial public offering or any Selling Securityholder
who paid more for their shares than the current market price.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b>Investing in our Class A Common Stock involves risks. See &#8220;Risk
Factors&#8221; beginning on page 10.&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have not registered the
sale of the shares under the securities laws of any state. Brokers or dealers effecting transactions in the shares of Class A Common Stock
offered hereby should confirm that the shares have been registered under the securities laws of the state or states in which sales of
the shares occur as of the time of such sales, or that there is an available exemption from the registration requirements of the securities
laws of such states.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have not authorized anyone,
including any salesperson or broker, to give oral or written information about this offering, EON Resources Inc., or the shares of Class
A Common Stock offered hereby that is different from the information included in this prospectus. You should not assume that the information
in this prospectus, or any supplement to this prospectus, is accurate at any date other than the date indicated on the cover page of this
prospectus or any supplement to it.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b>We are an &#8220;emerging
growth company,&#8221; as defined under the federal securities laws, and, as such, may elect to comply with certain reduced public company
reporting requirements for future filings.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b>Neither the SEC nor any
state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete.
Any representation to the contrary is a criminal offense.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="margin: 0pt">&#160;</p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>TABLE OF CONTENTS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 90%">&#160;</td>
    <td style="width: 1%">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: center; width: 9%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Page</b>&#160;</span></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td><a href="#k_001"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">About this Prospectus</span></a></td>
    <td>&#160;</td>
    <td style="text-align: center">ii</td></tr>
  <tr style="vertical-align: top; ">
    <td><a href="#k_002"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Prospectus Summary</span></a></td>
    <td>&#160;</td>
    <td style="text-align: center">1</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td><a href="#k_003"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Summary Risk Factors</span></a></td>
    <td>&#160;</td>
    <td style="text-align: center">5</td></tr>
  <tr style="vertical-align: top; ">
    <td><a href="#k_004"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">About this Offering</span></a></td>
    <td>&#160;</td>
    <td style="text-align: center">7</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td><a href="#k_005"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Summary Historical Financial Information of EON Resources Inc.</span></a></td>
    <td>&#160;</td>
    <td style="text-align: center">8</td></tr>
  <tr style="vertical-align: top; ">
    <td><a href="#k_006"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Risk Factors</span></a></td>
    <td>&#160;</td>
    <td style="text-align: center">10</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td><a href="#k_007"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Special Note Regarding Forward-Looking Statements</span></a></td>
    <td>&#160;</td>
    <td style="text-align: center">39</td></tr>
  <tr style="vertical-align: top; ">
    <td><a href="#k_008"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">White Lion Committed Equity Financing</span></a></td>
    <td>&#160;</td>
    <td style="text-align: center">41</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td><a href="#k_009"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Use of Proceeds</span></a></td>
    <td>&#160;</td>
    <td style="text-align: center">44</td></tr>
  <tr style="vertical-align: top; ">
    <td><a href="#k_010"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Business of EON</span></a></td>
    <td>&#160;</td>
    <td style="text-align: center">56</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td><a href="#k_011"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Management&#8217;s Discussion and Analysis of Financial Condition and Results of Operations of EON</span></a></td>
    <td>&#160;</td>
    <td style="text-align: center">83</td></tr>
  <tr style="vertical-align: top; ">
    <td><a href="#k_012"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Management</span></a></td>
    <td>&#160;</td>
    <td style="text-align: center">98</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td><a href="#k_013"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Compensation of Executive Officers and Directors</span></a></td>
    <td>&#160;</td>
    <td style="text-align: center">103</td></tr>
  <tr style="vertical-align: top; ">
    <td><a href="#k_014"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Beneficial Ownership of Securities</span></a></td>
    <td>&#160;</td>
    <td style="text-align: center">114</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td><a href="#k_015"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Market Prices and Dividends</span></a></td>
    <td>&#160;</td>
    <td style="text-align: center">116</td></tr>
  <tr style="vertical-align: top; ">
    <td><a href="#k_016"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Certain Relationships and Related Transactions</span></a></td>
    <td>&#160;</td>
    <td style="text-align: center">117</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td><a href="#k_017"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Selling Securityholders</span></a></td>
    <td>&#160;</td>
    <td style="text-align: center">119</td></tr>
  <tr style="vertical-align: top; ">
    <td><a href="#k_018"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Description of Securities</span></a></td>
    <td>&#160;</td>
    <td style="text-align: center">121</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td><a href="#k_019"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Material United States Federal Income Tax Considerations</span></a></td>
    <td>&#160;</td>
    <td style="text-align: center">128</td></tr>
  <tr style="vertical-align: top; ">
    <td><a href="#k_020"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Securities Act Restrictions on Resale of Our Securities</span></a></td>
    <td>&#160;</td>
    <td style="text-align: center">132</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td><a href="#k_021"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Plan of Distribution</span></a></td>
    <td>&#160;</td>
    <td style="text-align: center">133</td></tr>
  <tr style="vertical-align: top; ">
    <td><a href="#k_022"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Legal Matters</span></a></td>
    <td>&#160;</td>
    <td style="text-align: center">136</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td><a href="#k_023"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Experts</span></a></td>
    <td>&#160;</td>
    <td style="text-align: center">136</td></tr>
  <tr style="vertical-align: top; ">
    <td><a href="#k_024"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Where You Can Find More Information</span></a></td>
    <td>&#160;</td>
    <td style="text-align: center">136</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td><a href="#k_025"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Index to Financial Statements</span></a></td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-1</span></td></tr>
  </table><div>



</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt"></p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><div><a id="k_001"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>ABOUT THIS PROSPECTUS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">This prospectus is part of
a registration statement on Form S-1 that we filed with the U.S. Securities Exchange Commission (the &#8220;SEC&#8221;), under which the
Selling Securityholders may, from time to time, sell the securities listed herein offered by them described in this prospectus. We will
not receive any proceeds from the sale by such Selling Securityholders of the securities offered by them described in this prospectus.
However, we may receive proceeds of up to approximately $145.1 million in remaining available proceeds from the sale of the shares to
White Lion under the Common Stock Purchase Agreement, from time to time in our discretion after the date the registration statement that
includes this prospectus is declared effective and after satisfaction of other conditions in the Common Stock Purchase Agreement.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Neither we nor the Selling
Securityholders have authorized anyone to provide you with any information or to make any representations other than those contained in
this prospectus, any applicable prospectus supplement, or any free writing prospectuses prepared by or on behalf of us or to which we
have referred you. Neither we nor the Selling Securityholders take responsibility for, and can provide no assurance as to the reliability
of, any other information that others may give you. Neither we nor the Selling Securityholders will make an offer to sell these securities
in any jurisdiction where such offer or sale is not permitted. No dealer, salesperson, or other person is authorized to give any information
or to represent anything not contained in this prospectus, any applicable prospectus supplement or any related free writing prospectus.
You should assume that the information appearing in this prospectus or any prospectus supplement is accurate as of the date on the front
of those documents only, regardless of the time of delivery of this prospectus or any applicable prospectus supplement, or any sale of
a security. Our business, financial condition, results of operations, and prospects may have changed since those dates.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Selling Securityholders
and their permitted transferees may use this registration statement to sell securities from time to time through any means described in
the section entitled &#8220;Plan of Distribution<i>.</i>&#8221; More specific terms of any securities that the Selling Securityholders
and their permitted transferees offer and sell may be provided in a prospectus supplement that describes, among other things, the specific
amounts and prices of the securities being offered and the terms of the offering.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We may also provide a prospectus
supplement or post-effective amendment to the registration statement to add information to, or update or change information contained
in, this prospectus. Any statement contained in this prospectus will be deemed to be modified or superseded for purposes of this prospectus
to the extent that a statement contained in such prospectus supplement or post-effective amendment modifies or supersedes such statement.
Any statement so modified will be deemed to constitute a part of this prospectus only as so modified, and any statement so superseded
will be deemed not to constitute a part of this prospectus. You should read both this prospectus and any applicable prospectus supplement
or post-effective amendment to the registration statement together with the additional information to which we refer you in the section
of this prospectus entitled &#8220;Where You Can Find More Information.&#8221;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">This prospectus contains summaries
of certain provisions contained in some of the documents described herein, but reference is made to the actual documents for complete
information. All of the summaries are qualified in their entirety by the actual documents. Copies of some of the documents referred to
herein have been filed, will be filed, or will be incorporated by reference as exhibits to the registration statement of which this prospectus
is a part, and you may obtain copies of those documents as described below under &#8220;Where You Can Find More Information.&#8221;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: LowerRoman; Name: PageNo -->ii<!-- Field: /Sequence --></span></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt"></p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>CERTAIN TERMS </b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 24.5pt"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><i>Unless otherwise stated in this prospectus,
or the context otherwise requires, references to:</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8220;Class A Common Stock&#8221; is to our Class A Common Stock, par value $0.0001 per share;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 24.5pt"><i>&#160;</i></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8220;Class B Common Stock&#8221; is to our Class B Common Stock, par value $0.0001 per share;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8220;founder shares&#8221; are to shares of our Class A Common Stock initially purchased by our sponsor in a private placement prior to our Initial Public Offering;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8220;initial business combination&#8221; or &#8220;Purchase&#8221; refers to the completion of our initial business combination on November 15, 2023, pursuant to the closing of the transactions contemplated by the MIPA whereby we acquired (through our subsidiaries) 100% of the outstanding membership interests of Pogo Resources, LLC, a Texas limited liability company (&#8220;Pogo&#8221; or the &#8220;Target&#8221;); &#160; &#160; &#160; &#160; </span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8220;Initial Public Offering&#8221; refers to the Initial Public Offering closed on February 15, 2022;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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<a id="k_002"></a><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>PROSPECTUS SUMMARY</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>This summary highlights
information contained elsewhere in this prospectus and may not contain all of the information that you should consider before investing
in the shares. You are urged to read this prospectus in its entirety, including the information under &#8220;Risk Factors&#8221; and our
financial statements and related notes included elsewhere in this Prospectus. Unless otherwise indicated, the estimates of our proved,
probable and possible reserves as of December 31, 2022 and 2023 were prepared by the third-party independent petroleum engineering firm
of William M. Cobb &amp; Associates, Inc.</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Overview</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">EON Resources, Inc. (f/k/a
HNR Acquisition Corp), was incorporated in Delaware as a blank check company formed for the purpose of effecting a merger, capital stock
exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses or entities. Prior
to closing the Purchase, our efforts were limited to organizational activities, completion of an initial public offering and the evaluation
of possible business combinations. On February 15, 2022, we consummated the Initial Public Offering of 7,500,000 units (the &#8220;Units&#8221;),
at $10.00 per Unit, generating proceeds of $75,000,000. Additionally, the underwriter fully exercised its option to purchase 1,125,000
additional Units, for which we received cash proceeds of $11,250,000. Simultaneously with the closing of the Initial Public Offering,
we consummated the sale of 505,000 private placement units at a price of $10.00 per unit generating proceeds of $5,050,000 in a private
placement to our Sponsor and EF Hutton (formerly Kingswood Capital Markets) (&#8220;EF Hutton&#8221;). On April 4, 2022, the Units separated
into Class A Common Stock and warrants, and ceased trading. On April 4, 2022, the Class A Common Stock and Public Warrants commenced trading
on the NYSE American.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We identified Pogo as the
initial target for our initial business combination, and on November 15, 2023, we closed on the acquisition of Pogo. While we were permitted
to pursue an acquisition opportunity in any industry or sector, we focused on assets used in exploring, developing, producing, transporting,
storing, gathering, processing, fractionating, refining, distributing or marketing of natural gas, natural gas liquids, crude oil or refined
products in North America.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On September 16, 2024, we
filed a Certificate of Amendment to our Amended and Restated Certificate of Incorporation with the Secretary of State of the State of
Delaware to change our name from &#8220;HNR Acquisition Corp&#8221; to &#8220;EON Resources Inc.&#8221;, effective at 11:59PM on September
17, 2024. Following the change of our name from HNR Acquisition Corp to EON Resources Inc., effective at the beginning of trading on September
18, 2024, our Class A Common Stock began trading on the NYSE American under the symbol &#8220;EONR&#8221; and our Public Warrants began
trading on the NYSE American under the symbol &#8220;EONR WS&#8221;. The CUSIP numbers for the Company&#8217;s Class A Common Stock and
Public Warrants did not change.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Purchase</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On December&#160;27, 2022,
we entered into a Membership Interest Purchase Agreement (the &#8220;Original MIPA&#8221;) with CIC Pogo LP, a Delaware limited partnership
(&#8220;CIC&#8221;), DenCo Resources, LLC, a Texas limited liability company (&#8220;DenCo&#8221;), Pogo Resources Management, LLC, a
Texas limited liability company (&#8220;Pogo Management&#8221;), 4400 Holdings, LLC, a Texas limited liability company (&#8220;4400&#8221;
and, together with CIC, DenCo and Pogo Management, collectively, &#8220;Seller&#8221; and each a &#8220;Seller&#8221;), and, solely with
respect to Section&#160;7.20 of the Original MIPA, HNRAC Sponsors LLC, a Delaware limited liability company (&#8220;Sponsor&#8221;). On
August&#160;28, 2023, we, HNRA Upstream, LLC, a newly formed Delaware limited liability company which is managed by us, and is a subsidiary
of ours (&#8220;OpCo&#8221;), and HNRA Partner, Inc., a newly formed Delaware corporation and wholly owned subsidiary of ours (&#8220;SPAC
Subsidiary&#8221;, and together with us and OpCo, &#8220;Buyer&#8221; and each a &#8220;Buyer&#8221;), entered into an Amended and Restated
Membership Interest Purchase Agreement (the &#8220;A&amp;R MIPA&#8221;) with Seller, and, solely with respect to Section&#160;6.20 of
the A&amp;R MIPA, the Sponsor, which amended and restated the Original MIPA in its entirety (as amended and restated, the &#8220;MIPA&#8221;).
Our stockholders approved the transactions contemplated by the MIPA at a special meeting of stockholders that was originally convened
October 30, 2023, adjourned, and then reconvened on November 13, 2023 (the &#8220;Special Meeting&#8221;).</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On November 15, 2023 (the
&#8220;Closing Date&#8221;), as contemplated by the MIPA:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

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    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We filed a Second Amended and Restated Certificate of Incorporation (the &#8220;Second A&amp;R Charter&#8221;) with the Secretary of State of the State of Delaware, pursuant to which the number of authorized shares of our capital stock, par value $0.0001 per share, was increased to 121,000,000 shares, consisting of (i) 100,000,000 shares of Class A Common Stock, (ii) 20,000,000 shares of Class B Common Stock, and (iii) 1,000,000 shares of preferred stock, par value $0.0001 per share;</span></td></tr>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

</div><div>

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</div><div style="padding: 5pt; border: Black 1.5pt solid; width: 98%">

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our shares of common stock were reclassified as Class A Common Stock; the Class B Common Stock has no economic rights but entitles its holder to one vote on all matters to be voted on by stockholders generally; holders of shares of Class A Common Stock and shares of Class B Common Stock will vote together as a single class on all matters presented to our stockholders for their vote or approval, except as otherwise required by applicable law or by the Second A&amp;R Charter;</span></td></tr>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The &#8220;Aggregate Consideration&#8221;
for the Target Interests was: (a) cash in the amount of $31,074,127 in immediately available funds (the &#8220;Cash Consideration&#8221;),
(b) 2,000,000 Class B common units of OpCo (&#8220;OpCo Class B Units&#8221;) valued at $10.00 per unit (the &#8220;Common Unit Consideration&#8221;),
which will be equal to and exchangeable into 2,000,000 shares of Class A Common Stock issuable upon exercise of the OpCo Exchange Right
(as defined below), as reflected in the amended and restated limited liability company agreement of OpCo that became effective at Closing
(the &#8220;A&amp;R OpCo LLC Agreement&#8221;), (c) the Seller Class B Shares, (d) $15,000,000 payable through a promissory note to Seller
(the &#8220;Seller Promissory Note&#8221;), (e) 1,500,000 preferred units (the &#8220;OpCo Preferred Units&#8221; and together with the
Opco Class A Units and the OpCo Class B Units, the &#8220;OpCo Units&#8221;) of OpCo (the &#8220;Preferred Unit Consideration&#8221;,
and, together with the Common Unit Consideration, the &#8220;Unit Consideration&#8221;), and (f) an agreement for Buyer, on or before
November 21, 2023, to settle and pay to Seller $1,925,873 from sales proceeds received from oil and gas production attributable to Pogo,
including pursuant to its third party contract with affiliates of Chevron. At Closing, 500,000 Seller Class B Shares (the &#8220;Escrowed
Share Consideration&#8221;) were placed in escrow for the benefit of Buyer pursuant to an escrow agreement and the indemnity provisions
in the MIPA. The Aggregate Consideration is subject to adjustment in accordance with the MIPA.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In connection with the Purchase,
holders of 3,323,707 shares of common stock sold in our initial public offering (the &#8220;public shares&#8221;) properly exercised their
right to have their public shares redeemed (the &#8220;Redemption Rights&#8221;) for a pro rata portion of the trust account (the &#8220;Trust
Account&#8221;) which held the proceeds from our initial public offering, funds from our payments to extend the time to consummate a business
combination and interest earned, calculated as of two business days prior to the Closing, which was approximately $10.95 per share, or
$49,362,479 in the aggregate. The remaining balance in the Trust Account (after giving effect to the Redemption Rights) was $12,979,300.</p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Immediately upon the Closing,
Pogo Royalty exercised the OpCo Exchange Right as it relates to 200,000 OpCo Class B units (and 200,000 shares of Class B Common Stock).
After giving effect to the Purchase, the redemption of public shares as described above and the exchange mentioned in the preceding sentence,
were (i) 5,097,009 shares of Class A Common Stock issued and outstanding, (ii) 1,800,000 shares of Class B Common Stock issued and outstanding
and (iii) no shares of preferred stock issued and outstanding.</p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Pogo Overview</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pogo is an exploration and
production company that began operations in February&#160;2017. Pogo is based in Dallas, Texas, and a field office in Loco Hills, New
Mexico. As of December&#160;31, 2023, Pogo&#8217;s operating focus is the Northwest Shelf of the Permian Basin, with a specific emphasis
on oil and gas producing properties located in the Grayburg-Jackson&#160;Field in Eddy County, New Mexico. Pogo is the Operator of Record
of its oil and gas properties, operating its properties through its wholly owned subsidiary, LH Operating LLC.&#160;Pogo completed multiple
acquisitions in 2018 and 2019. These acquisitions included multiple producing properties in Lea and Eddy counties, New Mexico.&#160;In
2020, after identifying its core development property, Pogo successfully completed a series of divestures of its non-core&#160;properties.
Then, with one key asset, its Grayburg-Jackson&#160;Field in Eddy County, New Mexico, Pogo focused all of its efforts on developing this
asset. This has been Pogo&#8217;s focus for 2022 and 2023. Currently, Pogo and EON combined have 14 employees (5 executive officers where
4 are in Houston and 1 in Lubbock; 9 field staff in Loco Hills). From time to time, on an as needed basis, contract workers handle additional
necessary responsibilities.</p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pogo owns, manages, and operates,
through its wholly owned subsidiary, LH Operating, LLC, 100% working interest in a gross 13,700 acres located on the Northwest Shelf of
the prolific oil and gas producing Permian Basin. Pogo benefits from cash flow growth through continued development of its working interest&#8217;s
ownership, with relatively low capital cost and lease operating expenses. As of December&#160;31, 2023, average net daily production associated
with Pogo&#8217;s working interests was 1,022 barrel of oil equivalent (&#8220;BOE&#8221;) per&#160;day consisting of 94% oil and 6% natural
gas. Pogo expects to continue to grow its cash flow by production enhancements in its operations on its gross 13,700-acre&#160;leasehold.
Furthermore, Pogo intends to make additional acquisitions within the Permian Basin, as well as other oil and gas producing regions in
the USA, that meet its investment criteria for minimum risk, geologic quality, operator capability, remaining growth potential, cash flow
generation and, most importantly, rate of return.</p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As of December&#160;31, 2023,
100% of Pogo&#8217;s gross 13,700 leasehold acres were located in Eddy County, New Mexico, where there 100% of the leasehold working interests
owned by Pogo consist of state and federal lands. Pogo believes the Permian Basin offers some of the most compelling rates of return for
Pogo and significant potential for cash flow growth. As a result of compelling rates of return, development activity in the Permian Basin
has outpaced all other onshore U.S.&#160;oil and gas basins since the end of 2016. This development activity has driven basin-level&#160;production
to grow faster than production in the rest of the United&#160;States.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pogo&#8217;s working interests
entitle it to receive an average of 97% of the net revenue from crude oil and natural gas produced from the oil and gas reservoirs underlying
its acreage. Pogo is not under any mandatory obligation to fund drilling and completion costs associated with oil and gas development
because 100% of its lease holdings are held by production. As a working interest owner with significant net earnings, Pogo seeks to fully
capture all remaining oil and gas reserves underlying its leasehold acres by systematically developing its low risk, predictable, proven
reserves by means of adding perforations in previously drilled and completed wells, were applicable, and drilling new wells in a predetermined
drilling pattern. Accordingly, Pogo&#8217;s development model generates strong margins greater than 60%, at low risk, predictable, production
outcomes that requires low overhead and is highly scalable. For the year ended December&#160;31, 2023, Pogo&#8217;s lifting cost was about
$27.21 per barrel of oil equivalent at a realized price of $72.69 per BOE, excluding the impact of settled commodity derivatives. Pogo
is led by a management team with extensive oil and gas engineering, geologic and land expertise, long-standing&#160;industry relationships
and a history of successfully managing a portfolio of working and leasehold interests, producing crude oil and natural gas assets. Pogo
intends to capitalize on its management team&#8217;s expertise and relationships to increase production and cash flow in the field.</p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Pogo Business Strategies</b></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pogo&#8217;s primary business
objective is to generate discretionary cash flow by maintaining its strong cash flow from the PDP reserves and increasing cash flow by
developing predictable, low cost PDNP reserves in its Permian Basin asset. Pogo intends to accomplish this objective by executing the
following strategies:</p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b><i>Generate strong cash
flow supported by means of disciplined development of its PDNP Reserves.</i></b> As the sole working interest owner, Pogo benefits from
the continued organic development of its acreage in the Permian Basin. As of December&#160;31, 2023, Pogo, in conjunction with William
M. Cobb &amp; Associates, Inc. (&#8220;Cobb &amp; Associates&#8221;), a third-party&#160;engineering consulting firm, has confirmed that
Pogo has 115, low cost, well patterns to be developed during 2024 to 2027. The total costs to complete these 115 well patterns have been
predetermined by historical analysis. The estimated cost to complete each PDNP pattern is $345,652 and the estimated cost to complete
each PUD pattern is $1,187,698. A single well pattern consists of one each producing well with its corresponding or dedicated water injection
wells, with each injection well situated on four sides of the producing well. Water injection wells are necessary to maintain reservoir
pressure in its original state and to move the oil in place toward the producing well. Pressure maintenance helps ensure maximum oil and
gas recovery. Without pressure maintenance, oil recoveries from a producing oil reservoir generally do not exceed 10% of the original
oil in place (&#8220;OOIP&#8221;). With pressure maintenance by re-injecting&#160;produced water into the oil reservoir, then Pogo expects
to see ultimate oil recoveries 25% or greater of the OOIP.&#160;Offsetting oil wells on its leasehold also take advantage of the water
injected into the oil reservoir, and is able to convert a high percentage of its revenue to discretionary cash flow. Because Pogo owns
100% working interests it incurs 100% of the monthly leasehold operating costs for the production of crude oil and natural gas or capital
costs for the drilling and completion of wells on its acreage. Because these wells are shallow oil producers, with vertical depths between
1500 ft and 4000 ft, the monthly operating expenses are relatively low.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b><i>Focus primarily on the
Permian Basin. </i></b>All of Pogo&#8217;s working interests are currently located in the Permian Basin, one of the most prolific oil
and gas basins in the United&#160;States. Pogo believes the Permian Basin provides an attractive combination of highly-economic&#160;and
oil-weighted&#160;geologic and reservoir properties, opportunities for development with significant inventory of drilling locations and
zones to be delineated our top-tier&#160;management team.</p>

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    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Business Relations. </b>Leverage expertise and relationships to continue acquiring Permian Basin targets with high working interests in actively producing oil fields from top-tier&#160;E&amp;P operators, with predictable, stable cash flow, and with significant growth potential. Pogo has a history of evaluating, pursuing and consummating acquisitions of crude oil and natural gas targets in the Permian Basin and other oil producing basins. Pogo&#8217;s management team intends to continue to apply this experience in a disciplined manner when identifying and acquiring working interests. Pogo believes that the current market environment is favorable for oil and gas acquisitions in the Permian Basin and other oil generating basins. Numerous asset packages from sellers presents attractive opportunities for assets that meet Pogo&#8217;s target investment criteria. With sellers seeking to monetize their investments, Pogo intends to continue to acquire working interests that have substantial resource potential in the Permian Basin. Pogo expects to focus on acquisitions that complement its current footprint in the Permian Basin while targeting working interests underlying large scale, contiguous acreage positions that have a history of predictable, stable oil and gas production rates, and with attractive growth potential. Furthermore, Pogo seeks to maximize its return on capital by targeting acquisitions that meet the following criteria:</span></td></tr>
  </table>
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    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">sufficient visibility to production growth;</span></td></tr>
  </table>
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    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">attractive economics;</span></td></tr>
  </table>
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    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">de-risked&#160;geology supported by stable production;</span></td></tr>
  </table>
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    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">targets from top-tier&#160;E&amp;P operators; and</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify; text-indent: -24pt">&#160;</p>

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  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">a geographic footprint that Pogo believes is complementary to its current Permian Basin asset and maximizes its potential for upside reserve and production growth.</span></td></tr>
  </table>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b>Maintain conservative and
flexible capital structure to support Pogo&#8217;s business and facilitate&#160;long-term&#160;operations. </b>Pogo is committed to maintaining
a conservative capital structure that will afford it the financial flexibility to execute its business strategies on an ongoing basis.
Pogo believes that internally generated cash flows from its working interests and operations, available borrowing capacity under its revolving
credit facility, and access to capital markets will provide it with sufficient liquidity and financial flexibility to continue to acquire
attractive targets with high working interests that will position it to grow its cash flows in order to distributed to its shareholders
as dividends and/or reinvested to further expand its base of cash flow generating assets. Pogo intends to maintain a conservative leverage
profile and utilize a mix of cash flows from operations and issuance of debt and equity securities to finance future acquisitions.</p>

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<a id="k_003"></a><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>SUMMARY RISK FACTORS</b></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>You should carefully read
this prospectus, including the section entitled &#8220;Risk Factors.&#8221; Certain of the key risks are summarized below. </i></p>

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<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pogo&#8217;s producing properties are located in the Permian Basin, making it vulnerable to risks associated with operating in a single geographic area.</span></td></tr>
  </table>
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<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Title to the properties in which Pogo is acquiring an interest may be impaired by title defects.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pogo depends on various services for the development and production activities on the properties it operates. Substantially all Pogo&#8217;s revenue is derived from these producing properties. A reduction in the expected number of wells to be developed on Pogo&#8217;s acreage by or the failure of Pogo to develop and operate the wells on its acreage could have an adverse effect on its results of operations and cash flows adequately and efficiently.</span></td></tr>
  </table>
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<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pogo&#8217;s identified development activities are susceptible to uncertainties that could materially alter the occurrence or timing of their development activities.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Acquisitions and Pogo&#8217;s development of Pogo&#8217;s leases will require substantial capital, and our company may be unable to obtain needed capital or financing on satisfactory terms or at all.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pogo currently plans&#160;to enter hedging arrangements with respect to the production of crude oil, and possibly natural gas which is a smaller portion of the reserves. Pogo will mitigate the exposure to the impact of decreases in the prices by establishing a hedging plan and structure that protects the earnings to a reasonable level, and the debt service requirements.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pogo&#8217;s estimated reserves are based on many assumptions that may turn out to be inaccurate. Any material inaccuracies in these reserve estimates or underlying assumptions will materially affect the quantities and present value of its reserves.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We believe Pogo currently has ineffective internal control over its financial reporting.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&#160;</p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&#160;</p>

<a id="k_004"></a><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>ABOUT THIS OFFERING</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">This prospectus relates to
the offering of up to 5,079,050 shares of Class A Common Stock.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><b> Resale Offering of Class A Common Stock</b></p>



<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

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<tr style="vertical-align: top">
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    <td style="text-align: justify; width: 74%">The shares of Class A Common Stock being registered for resale were issued to, purchased by or will be purchased by the Selling Securityholders for the following consideration: (i) a purchase price yet to be determined for the ELOC Shares (as described herein), (ii) a purchase of price of $1.00 per share of Class A Common Stock for the Exchange Shares, and (iii) a purchase of price of $0.82 per share of Class A Common Stock for the Service Shares. &#160;</td></tr>
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    <td style="text-align: justify">We will not receive any of the proceeds from the resale of the shares offered by the Selling Securityholders. However, we may receive up to approximately $145.1 million in remaining available proceeds from the sale of the shares to White Lion under the Common Stock Purchase Agreement, from time to time in our discretion after the date the registration statement that includes this prospectus is declared effective and after satisfaction of other conditions in the Common Stock Purchase Agreement. We intend to use any proceeds from White Lion that we receive under the Common Stock Purchase Agreement for working capital, strategic and general corporate purposes. &#160;</td></tr>
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    <td style="text-align: justify">Our Class A Common Stock is currently listed on NYSE American under
the symbol &#8220;EONR&#8221; and our Public Warrants are currently listed on NYSE American under the symbol &#8220;EONR WS&#8221;. On
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    <td style="text-align: justify">See the section titled &#8220;Risk Factors&#8221; beginning on page
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

<a id="k_005"></a><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>SUMMARY HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
OF EON RESOURCES INC. </b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following table presents
selected historical consolidated financial data for the periods indicated. The summary historical consolidated financial data as of June
30, 2024 and for the six months ended June 30, 2024 (Successor) are derived from the Company&#8217;s unaudited consolidated financial
statements and related notes thereto. The summary historical consolidated financial data as of December 31, 2023 and for the period from
November 15, 2023 to December 31, 2023 (Successor) are derived from the Company&#8217;s audited consolidated financial statements and
related notes thereto. The summary historical consolidated financial data as of and for the three months ended March 31, 2024 are derived
from Pogo&#8217;s unaudited consolidated financial statements and related notes thereto. The summary historical consolidated financial
data as of and for the&#160;years ended December&#160;31, 2022, 2021 and 2020 and for the period from January 1, 2023 to November 14,
2023 for the Predecessor are derived from Pogo&#8217;s audited consolidated financial statements and related notes thereto. The unaudited
and audited consolidated financial statements and related notes thereto for the are included elsewhere in this prospectus.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Company&#8217;s historical
results are not necessarily indicative of the results that may be expected for any other period in the future. For a detailed discussion
of the summary historical financial data contained in the following table, please read &#8220;Management&#8217;s Discussion and Analysis
of Financial Condition and Results of Operations of Pogo.&#8221; The following table should also be read in conjunction with the historical
financial statements of Pogo included elsewhere in this prospectus. Among other things, the historical financial statements include more
detailed information regarding the basis of presentation for the information in the following table.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p>

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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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    <td style="text-indent: -0.125in; padding-left: 0.25in">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">352,127</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">1,497,749</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">1,613,402</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">4,783,832</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">2,207,963</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">11,062</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">848,040</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">1,575,296</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">3,553,117</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">3,700,267</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">2,953,202</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">1,862,969</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">1,468,615</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">&#8212;</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">&#8212;</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">&#8212;</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">&#8212;</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(1,982,958</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(1,191,553</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(5,732,747</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(1,043,312</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(1,834,208</td><td style="text-align: left">)</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(816,011</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">69,486</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(2,706,642</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(94,643</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -0.125in; padding-left: 0.25in; text-align: left; padding-bottom: 1.5pt">Total other income (expenses)</td><td style="padding-bottom: 1.5pt">&#160;</td>
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(451,724</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(2,978,138</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-indent: -0.125in; padding-left: 0.25in; text-align: left">Income (loss) before income taxes</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(11,577,447</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(11,388,841</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">4,970,863</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">18,296,002</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">3,402,486</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(2,304,759</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -0.125in; padding-left: 0.25in; text-align: left">Income tax provision</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">2,404,979</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">2,387,639</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-indent: -0.125in; padding-left: 0.25in; text-align: left; padding-bottom: 1.5pt">Net income (loss)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(9,172,468</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(9,001,202</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">4,970,863</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">18,296,002</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">3,402,486</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -0.125in; padding-left: 0.25in; text-align: left; padding-bottom: 1.5pt">Net income (loss) attributable to noncontrolling interests</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">&#8212;</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">&#8212;</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">&#8212;</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">&#8212;</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">&#8212;</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">&#8212;</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left; padding-bottom: 1.5pt">Net income (loss) attributable to EON Resources Inc.</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(9,172,468</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(9,001,202</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">4,970,863</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">18,296,002</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">3,402,486</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  </table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></p>

</div><div>

</div><!-- Field: Page; Sequence: 14; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->8<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt"></p></div><div>
    </div><!-- Field: /Page --><div>

</div><div style="padding: 5pt; border: Black 1.5pt solid; width: 98%">

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p>

<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: center">&#160;</td><td style="font-weight: bold; font-style: italic; padding-bottom: 1.5pt">&#160;</td>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p>

<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><div><a id="k_006"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>RISK FACTORS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>An investment in our in
our Class A Common Stock involves a high degree of risk. The risks described below include all material risks to our company or to investors
in this offering that are known to our company. You should carefully consider such risks before participating in this offering. If any
of the following risks actually occur, our business, financial condition and results of operations could be materially harmed. As a result,
the trading price of our Class A Common Stock could decline, and you might lose all or part of your investment. When determining whether
to buy our Class A Common Stock, you should also refer to the other information in this prospectus, including our financial statements
and the related notes included elsewhere in this prospectus.</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition to the other information
in this prospectus, you should carefully consider the following factors in evaluating us and our business. This prospectus contains, in
addition to historical information, forward-looking statements that involve risks and uncertainties, some of which are beyond our control.
Should one or more of these risks and uncertainties materialize or should underlying assumptions prove incorrect, our actual results could
differ materially. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below,
as well as those discussed elsewhere in this prospectus, including the documents incorporated by reference.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">There are risks associated
with investing in companies such as ours who are primarily engaged in research and development. In addition to risks which could apply
to any company or business, you should also consider the business we are in and the following:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Risks Related to Our Business</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Pogo&#8217;s producing properties are located
in the Permian Basin, making it vulnerable to risks associated with operating in a single geographic area.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">All of Pogo&#8217;s producing
properties are currently geographically concentrated in the Permian Basin. As a result of this concentration, Pogo may be disproportionately
exposed to the impact of regional supply and demand factors, delays or interruptions of production from wells in this area caused by governmental
regulation, processing or transportation capacity constraints, availability of equipment, facilities, personnel or services market limitations,
natural disasters, adverse weather conditions, plant closures for scheduled maintenance or interruption of the processing or transportation
of crude oil and natural gas. In addition, the effect of fluctuations on supply and demand may become more pronounced within specific
geographic crude oil and natural gas producing areas such as the Permian Basin, which may cause these conditions to occur with greater
frequency or magnify the effects of these conditions. Due to the concentrated nature of Pogo&#8217;s portfolio of properties, a number
of its properties could experience any of the same conditions at the same time, resulting in a relatively greater impact on its results
of operations than they might have on other companies that have a more diversified portfolio of properties. Such delays or interruptions
could have a material adverse effect on Pogo&#8217;s financial condition and results of operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As a result of Pogo&#8217;s
exclusive focus on the Permian Basin, it may be less competitive than other companies in bidding to acquire assets that include properties
both within and outside of that basin. Although Pogo is currently focused on the Permian Basin, it may from time to time evaluate and
consummate the acquisition of asset packages that include ancillary properties outside of that basin, which may result in the dilution
of its geographic focus.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Title to the properties in which Pogo is
acquiring an interest may be impaired by title defects.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pogo is not required to, and
under certain circumstances it may elect not to, incur the expense of retaining lawyers to examine the title to its operating interests.
In such cases, Pogo would rely upon the judgment of oil and gas lease brokers or landmen who perform the fieldwork in examining records
in the appropriate governmental office before acquiring an operating interest. The existence of a material title deficiency can render
an interest worthless and can materially adversely affect Pogo&#8217;s results of operations, financial condition and cash flows. No assurance
can be given that Pogo will not suffer a monetary loss from title defects or title failure. Additionally, undeveloped acreage has a greater
risk of title defects than developed acreage. If there are any title defects in properties in which Pogo holds an interest, it may suffer
a financial loss.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Pogo depends on various services for the
development and production activities on the properties it operates. Substantially all Pogo&#8217;s revenue is derived from these producing
properties. A reduction in the expected number of wells to be developed on Pogo&#8217;s acreage by or the failure of Pogo to develop and
operate the wells on its acreage could have an adverse effect on its results of operations and cash flows adequately and efficiently.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pogo&#8217;s assets consists
of operating interests. The failure of Pogo to perform operations adequately or efficiently or to act in ways that are not in Pogo&#8217;s
best interests could reduce production and revenues. Additionally, certain investors have requested that operators adopt initiatives to
return capital to investors, which could also reduce the capital available to Pogo for investment in development and production activities.
Moreover, should a low commodity price environment incur, Pogo may also opt to reduce development activity that could further reduce production
and revenues.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If production on Pogo acreage
decreases due to decreased development activities, because of a low commodity price environment, limited availability of development capital,
production-related&#160;difficulties or otherwise, Pogo&#8217;s results of operations may be adversely affected. Pogo is not obligated
to undertake any development activities other than those required to maintain their leases on Pogo&#8217;s acreage. In the absence of
a specific contractual obligation, any development and production activities will be subject to their reasonable discretion (subject to
certain implied obligations to develop imposed by the laws of some states). Pogo could determine to develop wells on Pogo&#8217;s acreage
than is currently expected. The success and timing of development activities on Pogo&#8217;s properties, depends on a number of factors
that are largely outside of Pogo&#8217;s control, including:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the capital costs required for development activities on Pogo&#8217;s acreage, which could be significantly more than anticipated;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">prevailing commodity prices;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the availability of suitable equipment, production and transportation infrastructure and qualified operating personnel;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in; text-align: justify">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the availability of storage for hydrocarbons, Pogo&#8217;s expertise, operating efficiency and financial resources;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in; text-align: justify">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in; text-align: justify">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in; text-align: justify">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the selection of counterparties for the marketing and sale of production;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in; text-align: justify">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pogo may elect not to undertake
development activities, or may undertake these activities in an unanticipated fashion, which may result in significant fluctuations in
Pogo&#8217;s results of operations and cash flows. Sustained reductions in production by Pogo on Pogo&#8217;s properties may also adversely
affect Pogo&#8217;s results of operations and cash flows. Additionally, if Pogo were to experience financial difficulty, Pogo might not
be able to pay invoices to continue its operations, which could have a material adverse impact on Pogo&#8217;s cash flows.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Pogo&#8217;s future success depends on replacing
reserves through acquisitions and the exploration and development activities.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Producing crude oil and natural
gas wells are characterized by declining production rates that vary depending upon reservoir characteristics and other factors. Pogo&#8217;s
future crude oil and natural gas reserves and Pogo&#8217;s production thereof and Pogo&#8217;s cash flows are highly dependent on the
successful development and exploitation of Pogo&#8217;s current reserves and its ability to successfully acquire additional reserves that
are economically recoverable. Moreover, the production decline rates of Pogo&#8217;s properties may be significantly higher than currently
estimated if the wells on its properties do not produce as expected. Pogo may also not be able to find, acquire or develop additional
reserves to replace the current and future production of its properties at economically acceptable terms. If Pogo is not able to replace
or grow its oil and natural gas reserves, its business, financial condition and results of operations would be adversely affected.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Pogo&#8217;s failure to successfully identify,
complete and integrate acquisitions of properties or businesses could materially and adversely affect its growth, results of operations
and cash flows.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pogo depends, in part, on
acquisitions to grow its reserves, production and cash flows. Pogo&#8217;s decision to acquire a property will depend in part on the evaluation
of data obtained from production reports and engineering studies, geophysical and geological analyses and seismic data, and other information,
the results of which are often inconclusive and subject to various interpretations. The successful acquisition of properties requires
an assessment of several factors, including:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">recoverable reserves;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">future crude oil and natural gas prices and their applicable differentials;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">development plans;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">operating costs Pogo&#8217;s E&amp;P operators would incur to develop and operate the properties;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">and potential environmental and other liabilities that E&amp;P operators may incur.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The accuracy of these assessments
is inherently uncertain and Pogo may not be able to identify attractive acquisition opportunities. In connection with these assessments,
Pogo performs a review of the subject properties that it believes to be generally consistent with industry practices, given the nature
of its interests. Pogo&#8217;s review will not reveal all existing or potential problems, nor will it permit it to become sufficiently
familiar with the properties to assess fully their deficiencies and capabilities. Inspections are often not performed on every well, and
environmental problems, such as groundwater contamination, are not necessarily observable even when an inspection is undertaken. Even
when problems are identified, the seller may be unwilling or unable to provide effective contractual protection against all or part of
the problems. Even if Pogo does identify attractive acquisition opportunities, it may not be able to complete the acquisition or do so
on commercially acceptable terms. Unless Pogo further develops its existing properties, it will depend on acquisitions to grow its reserves,
production and cash flow.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">There is intense competition
for acquisition opportunities in Pogo&#8217;s industry. Competition for acquisitions may increase the cost of, or cause Pogo to refrain
from, completing acquisitions. Additionally, acquisition opportunities vary over time. Pogo&#8217;s ability to complete acquisitions is
dependent upon, among other things, its ability to obtain debt and equity financing and, in some cases, regulatory approvals. Further,
these acquisitions may be in geographic regions in which Pogo does not currently hold assets, which could result in unforeseen operating
difficulties. In addition, if Pogo acquires interests in new states, it may be subject to additional and unfamiliar legal and regulatory
requirements. Compliance with regulatory requirements may impose substantial additional obligations on Pogo and its management, cause
it to expend additional time and resources in compliance activities and increase its exposure to penalties or fines for non-compliance&#160;with
such additional legal requirements. Further, the success of any completed acquisition will depend on Pogo&#8217;s ability to effectively
integrate the acquired business into its existing business. The process of integrating acquired businesses may involve unforeseen difficulties
and may require a disproportionate amount of Pogo&#8217;s managerial and financial resources. In addition, potential future acquisitions
may be larger and for purchase prices significantly higher than those paid for earlier acquisitions.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">No assurance can be given
that Pogo will be able to identify suitable acquisition opportunities, negotiate acceptable terms, obtain financing for acquisitions on
acceptable terms or successfully acquire identified targets. Pogo&#8217;s failure to achieve consolidation savings, to integrate the acquired
assets into its existing operations successfully or to minimize any unforeseen difficulties could materially and adversely affect its
financial condition, results of operations and cash flows. The inability to effectively manage these acquisitions could reduce Pogo&#8217;s
focus on subsequent acquisitions and current operations, which, in turn, could negatively impact its growth, results of operations and
cash flows.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Pogo may acquire properties that do not
produce as projected, and it may be unable to determine reserve potential, identify liabilities associated with such properties or obtain
protection from sellers against such liabilities.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Acquiring crude oil and natural
gas properties requires Pogo to assess reservoir and infrastructure characteristics, including recoverable reserves, development and operating
costs and potential environmental and other liabilities. Such assessments are inexact and inherently uncertain. In connection with the
assessments, Pogo performs a review of the subject properties, but such a review will not necessarily reveal all existing or potential
problems. In the course of Pogo&#8217;s due diligence, it may not inspect every well or pipeline. Pogo cannot necessarily observe structural
and environmental problems, such as pipe corrosion, when an inspection is made. Pogo may not be able to obtain contractual indemnities
from the seller for liabilities created prior to its purchase of the property. Pogo may be required to assume the risk of the physical
condition of the properties in addition to the risk that the properties may not perform in accordance with its expectations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Any acquisitions that Pogo completes will
be subject to substantial risks.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Even if Pogo makes acquisitions
that it believes will increase its cash generated from operations, these acquisitions may nevertheless result in a decrease in its cash
flows. Any acquisition involves potential risks, including, among other things:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">a significant increase in Pogo&#8217;s interest expense or financial leverage if it incurs debt to finance acquisitions;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
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    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">mistaken assumptions about the overall cost of equity or debt;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">an inability to hire, train or retain qualified personnel to manage and operate Pogo&#8217;s growing business and assets;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">and the occurrence of other significant changes, such as impairment of crude oil and natural gas properties, goodwill or other intangible assets, asset devaluation or restructuring charges.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Pogo&#8217;s identified development activities
are susceptible to uncertainties that could materially alter the occurrence or timing of their development activities.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The ability of Pogo to perform
development activities depends on a number of uncertainties, including the availability of capital, construction of and limitations on
access to infrastructure, inclement weather, regulatory changes and approvals, crude oil and natural gas prices, costs, development activity
results and the availability of water. Further, Pogo&#8217;s identified potential development activities are in various stages of evaluation,
ranging from wells that are ready to be developed to wells that require substantial additional interpretation. The use of technologies
and the study of producing fields in the same area will not enable Pogo to know conclusively prior to development activities whether crude
oil and natural gas will be present or, if present, whether crude oil and natural gas will be present in sufficient quantities to be economically
viable. Even if enough crude oil or natural gas exist, Pogo may damage the potentially productive hydrocarbon-bearing&#160;formation or
experience mechanical difficulties while performing development activities, possibly resulting in a reduction in production from the well
or abandonment of the well. If Pogo performs additional development activities on wells that do not respond or they produce at quantities
less than desired these wells may materially harm Pogo&#8217;s business.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">There is no guarantee that
the conclusions Pogo draws from available data and other wells near the Pogo acreage will be applicable to Pogo&#8217;s development activities.
Further, initial production rates reported by Pogo in the areas in which Pogo&#8217;s reserves are located may not be indicative of future
or long-term&#160;production rates. Additionally, actual production from wells may be less than expected. For example, a number of E&amp;P
operators have recently announced that newer wells drilled close in proximity to already producing wells have produced less oil and gas
than forecast. Because of these uncertainties, Pogo does not know if the potential development activities that have been identified will
ever be able to produce crude oil and natural gas from these or any other potential development activities. As such, the actual development
activities of Pogo may materially differ from those presently identified, which could adversely affect Pogo&#8217;s business, results
of operation and cash flows.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Acquisitions and Pogo&#8217;s development
of Pogo&#8217;s leases will require substantial capital, and our company may be unable to obtain needed capital or financing on satisfactory
terms or at all.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The crude oil and natural
gas industry is capital intensive. Pogo made substantial capital expenditures in connection with the acquisition and development of its
properties. Our company may continue to make substantial capital expenditures in connection with the acquisition and development of properties.
Our company will finance capital expenditures primarily with funding from cash generated by operations and borrowings under its revolving
credit facility.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In the future, Pogo may need
capital more than the amounts it retains in its business or borrows under its revolving credit facility. The level of borrowing base available
under Pogo&#8217;s revolving credit facility is largely based on its estimated proved reserves and its lenders&#8217; price decks and
underwriting standards in the reserve-based&#160;lending space and may be reduced to the extent commodity prices decrease and cause underwriting
standards to tighten or the lending syndication market is not sufficiently liquid to obtain lender commitments to a full borrowing base
in an amount appropriate for Pogo&#8217;s assets. Furthermore, Pogo cannot assure you that it will be able to access other external capital
on terms favorable to it or at all. For example, a significant decline in prices for crude oil and broader economic turmoil may adversely
impact Pogo&#8217;s ability to secure financing in the capital markets on favorable terms. Additionally, Pogo&#8217;s ability to secure
financing or access the capital markets could be adversely affected if financial institutions and institutional lenders elect not to provide
funding for fossil fuel energy companies in connection with the adoption of sustainable lending initiatives or are required to adopt policies
that have the effect of reducing the funding available to the fossil fuel sector. If Pogo is unable to fund its capital requirements,
Pogo may be unable to complete acquisitions, take advantage of business opportunities or respond to competitive pressures, any of which
could have a material adverse effect on its results of operation and free cash flow.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pogo is also dependent on
the availability of external debt, equity financing sources and operating cash flows to maintain its development program. If those financing
sources are not available on favorable terms or at all, then Pogo expects the development of its properties to be adversely affected.
If the development of Pogo&#8217;s properties is adversely affected, then revenues from Pogo&#8217;s operations may decline. If we issue
additional equity securities or securities convertible into equity securities, existing stockholders will experience dilution and the
new equity securities could have rights senior to those of our Class A Common Stock.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>The widespread outbreak of an illness, pandemic
(like COVID-19) or any other public health crisis may have material adverse effects on Pogo&#8217;s business, financial position, results
of operations and/or cash flows.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pogo faces risks related to
the outbreak of illnesses, pandemics and other public health crises that are outside of its control and could significantly disrupt its
operations and adversely affect its financial condition. For example, the COVID-19&#160;pandemic has caused a disruption to the oil and
natural gas industry and to Pogo&#8217;s business. The COVID-19&#160;pandemic negatively impacted the global economy, disrupted global
supply chains, reduced global demand for oil and gas, and created significant volatility and disruption of financial and commodity markets,
but has been improving since 2020.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The degree to which the COVID-19&#160;pandemic
or any other public health crisis adversely impacts Pogo&#8217;s operations, financial results and dividend policy will also depend on
future developments, which are highly uncertain and cannot be predicted. These developments include, but are not limited to, the duration
and spread of the pandemic, its severity, the actions to contain the virus or treat its impact, its impact on the economy and market conditions,
and how quickly and to what extent normal economic and operating conditions can resume. While this matter may disrupt its operations in
some way, the degree of the adverse financial impact cannot be reasonably estimated at this time.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Pogo currently plans&#160;to enter hedging
arrangements with respect to the production of crude oil, and possibly natural gas which is a smaller portion of the reserves. Pogo will
mitigate the exposure to the impact of decreases in the prices by establishing a hedging plan and structure that protects the earnings
to a reasonable level, and the debt service requirements.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pogo does currently plan to
enter into hedging arrangements to establish, in advance, a price for the sale of the crude oil and possibly natural gas produced from
its properties. The hedging plan and structure will be at a level to balance the debt service requirements and also allow Pogo to realize
the benefit of any short-term&#160;increase in the price of crude oil and natural gas. A portion of the crude oil and natural gas produced
from its properties will not be protected against decreases in the price of crude oil and natural gas, or prolonged periods of low commodity
prices. Hedging arrangements may limit Pogo&#8217;s ability to realize the benefit of rising prices and may result in hedging losses.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The intent of the hedging
arrangements is to mitigate the volatility in its cash flows due to fluctuations in the price of crude oil and natural gas. However, these
hedging activities may not be as effective as our company intends in reducing the volatility of its cash flows and, if entered into, are
subject to the risks of the terms of the derivative instruments derivative contract, there may be a change in the expected differential
between the underlying commodity price in the derivative instrument and the actual price received, our company&#8217;s hedging policies
and procedures may not be properly followed and the steps our company takes to monitor its derivative financial instruments may not detect
and prevent violations of its risk management policies and procedures, particularly if deception or other intentional misconduct is involved.
Further, our company may be limited in receiving the full benefit of increases in crude oil as a result of these hedging transactions.
The occurrence of any of these risks could prevent Pogo from realizing the benefit of a derivative contract.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Pogo&#8217;s estimated reserves are based
on many assumptions that may turn out to be inaccurate. Any material inaccuracies in these reserve estimates or underlying assumptions
will materially affect the quantities and present value of its reserves.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">It is not possible to measure
underground accumulation of crude oil and natural gas in an exact way. Crude oil and natural gas reserve engineering is not an exact science
and requires subjective estimates of underground accumulations of crude oil and natural gas and assumptions concerning future crude oil
and natural gas prices, production levels, ultimate recoveries and operating and development costs. As a result, estimated quantities
of proved reserves, projections of future production rates and the timing of development expenditures may turn out to be incorrect. Estimates
of Pogo&#8217;s proved reserves and related valuations as of December&#160;31, 2023 and December&#160;31, 2022 were prepared by Cobb &amp;
Associates. Cobb &amp; Associates conducted a detailed review of all of Pogo&#8217;s properties for the period covered by its reserve
report using information provided by Pogo. Over time, Pogo may make material changes to reserve estimates taking into account the results
of actual drilling, testing and production and changes in prices. In addition, certain assumptions regarding future crude oil and natural
gas prices, production levels and operating and development costs may prove incorrect. For example, due to the deterioration in commodity
prices and operator activity in 2020 as a result of the COVID-19&#160;pandemic and other factors, the commodity price assumptions used
to calculate Pogo&#8217;s reserves estimates declined, which in turn lowered its proved reserve estimates. A substantial portion of Pogo&#8217;s
reserve estimates are made without the benefit of a lengthy production history, which are less reliable than estimates based on a lengthy
production history. Any significant variance from these assumptions to actual figures could greatly affect Pogo&#8217;s estimates of reserves
and future cash generated from operations. Numerous changes over time to the assumptions on which Pogo&#8217;s reserve estimates are based,
as described above, often result in the actual quantities of crude oil and natural gas that are ultimately recovered being different from
its reserve estimates.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Furthermore, the present value
of future net cash flows from Pogo&#8217;s proved reserves is not necessarily the same as the current market value of its estimated reserves.
In accordance with rules established by the SEC and the Financial Accounting Standards Board (the &#8220;FASB&#8221;), Pogo bases the
estimated discounted future net cash flows from its proved reserves on the twelve-month&#160;average oil and gas index prices, calculated
as the unweighted arithmetic average for the first-day-of-the-month&#160;price for each month, and costs in effect on the date of the
estimate, holding the prices and costs constant throughout the life of the properties. Actual future prices and costs may differ materially
from those used in the present value estimate, and future net present value estimates using then current prices and costs may be significantly
less than the current estimate. In addition, the 10% discount factor Pogo uses when calculating discounted future net cash flows may not
be the most appropriate discount factor based on interest rates in effect from time to time and risks associated with Pogo or the crude
oil and natural gas industry in general.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Operating hazards and partially insured
or uninsured risks may result in substantial losses to Pogo and any losses could adversely affect Pogo&#8217;s results of operations and
cash flows.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The operations of Pogo will
be subject to all of the hazards and operating risks associated with drilling for and production of crude oil and natural gas, including
the risk of fire, explosions, blowouts, surface cratering, uncontrollable flows of crude oil and natural gas and formation water, pipe
or pipeline failures, abnormally pressured formations, casing collapses and environmental hazards such as crude oil spills, natural gas
leaks and ruptures or discharges of toxic gases. In addition, their operations will be subject to risks associated with hydraulic fracturing,
including any mishandling, surface spillage or potential underground migration of fracturing fluids, including chemical additives. The
occurrence of any of these events could result in substantial losses to Pogo due to injury or loss of life, severe damage to or destruction
of property, natural resources and equipment, pollution or other environmental damage, clean-up&#160;responsibilities, regulatory investigations
and penalties, suspension of operations and repairs required to resume operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Loss of Pogo&#8217;s information and computer
systems, including as a result of cyber-attacks, could materially and adversely affect Pogo&#8217;s business.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pogo relies on electronic
systems and networks to control and manage Pogo&#8217;s respective businesses. If any of such programs or systems were to fail for any
reason, including as a result of a cyber-attack, or create erroneous information in Pogo&#8217;s hardware or software network infrastructure,
possible consequences could be significant, including loss of communication links and inability to automatically process commercial transaction
or engage in similar automated or computerized business activities. Although Pogo has multiple layers of security to mitigate risks of
cyber-attacks, cyber-attacks&#160;on business have escalated in recent&#160;years. Moreover, Pogo is becoming increasingly dependent on
digital technologies to conduct certain exploration, development, production and processing activities, including interpreting seismic
data, managing drilling rigs, production activities and gathering systems, conducting reservoir modeling and estimating reserves. The
U.S.&#160;government has issued public warnings that indicate that energy assets might be specific targets of cyber security threats.
If Pogo becomes the target of cyber-attacks&#160;of information security breaches, their business operations may be substantially disrupted,
which could have an adverse effect on Pogo&#8217;s results of operations. In addition, Pogo&#8217;s efforts to monitor, mitigate and manage
these evolving risks may result in increased capital and operating costs, and there can be no assurance that such efforts will be sufficient
to prevent attacks or breaches from occurring.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>A terrorist attack or armed conflict could
harm Pogo&#8217;s business.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Terrorist activities, anti-terrorist&#160;activities
and other armed conflicts involving the United&#160;States or other countries may adversely affect the United&#160;States and global economies
and could prevent Pogo from meeting its financial and other obligations. For example, on February&#160;24, 2022, Russia launched a large-scale&#160;invasion
of Ukraine that has led to significant armed hostilities. As a result, the United&#160;States, the United Kingdom, the member states of
the European Union and other public and private actors have levied severe sanctions on Russia. To date, this conflict has resulted in
a decreased supply of hydrocarbons which has resulted in higher commodity prices. The geopolitical and macroeconomic consequences of this
invasion and associated sanctions cannot be predicted, and such events, or any further hostilities in Ukraine or elsewhere, could severely
impact the world economy. If any of these events occur, the resulting political instability and societal disruption could reduce overall
demand for crude oil and natural gas potentially putting downward pressure on demand for Pogo&#8217;s services and causing a reduction
in its revenues. Crude oil and natural gas related facilities, including those of Pogo, could be direct targets of terrorist attacks,
and, if infrastructure integral to Pogo is destroyed or damaged, they may experience a significant disruption in their operations. Any
such disruption could materially adversely affect Pogo&#8217;s financial condition, results of operations and cash flows. Costs for insurance
and other security may increase as a result of these threats, and some insurance coverage may become more difficult to obtain, if available
at all.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We believe Pogo currently has ineffective
internal control over its financial reporting.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">A material weakness is a deficiency,
or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material
misstatement of Pogo&#8217;s annual or interim consolidated financial statements may not be prevented or detected on a timely basis. We
identified a material weakness and believe that Pogo currently has ineffective internal control over financial reporting, primarily due
to: not maintaining a sufficient complement of personnel to permit segregation of duties among personnel with access to Pogo&#8217;s accounting
and information systems controls, lacking proper review evidence of controls over the reserves report prepared by the reservoir engineer,
and lacking the controls needed to ensure that the accounting for certain items is accurate and complete.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We intend to remediate these
deficiencies by putting into place proper internal controls and accounting systems to ensure effective internal control over its financial
reporting. Completion of remediation does not provide assurance that our remediation or other controls will continue to operate properly
or remain adequate and we cannot assure you that we will not identify additional material weaknesses in our internal control over financial
reporting in the future. If we are unable to maintain effective internal control over financial reporting or disclosure controls and procedures,
our ability to record, process and report financial information accurately, and to prepare financial statements within the time periods
specified by the rules and forms of the SEC, could be adversely affected. This failure could negatively affect the market price and trading
liquidity of our stock, cause investors to lose confidence in our reported financial information, subject us to civil and criminal investigations
and penalties and generally materially and adversely impact our business and financial condition.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Our independent registered public accounting
firm&#8217;s report contains an explanatory paragraph that expresses substantial doubt about our ability to continue as a &#8220;going
concern.&#8221;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As of September 30, 2024,
we had $2,746,896 in cash and a working capital deficit of $38,801,444. Further, we had positive cash flow from operations of $3,346,362
for the nine months ended September 30, 2024. These factors raise substantial doubt about our ability to continue as a going concern.
Management&#8217;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 the Common Stock
Purchase Agreement with White Lion, which can fund our operations and production growth, and be used to reduce our liabilities. While
there can be no assurance of success, our management believes that its plans and the overall outlook of the oil and gas industry sufficiently
alleviate the factors raising substantial doubt about its ability to continue as a going concern.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We are dependent upon our executive officers
and directors and their departure could adversely affect our ability to operate.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our operations are dependent
upon a relatively small group of individuals. We believe that our success depends on the continued service of our executive officers and
directors. In addition, our executive officers and directors are not required to commit any specified amount of time to our affairs and,
accordingly, will have conflicts of interest in allocating management time among various business activities. The unexpected loss of the
services of one or more of our directors or executive officers could have a detrimental effect on us.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Certain of our executive officers and directors
are now, and all of them may in the future become, affiliated with entities engaged in business activities similar to those conducted
by us.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our executive officers and
directors are, or may in the future become, affiliated with entities that are engaged in business activities similar to our own.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our officers and directors
also may become aware of business opportunities which may be appropriate for presentation to us and the other entities to which they owe
certain fiduciary or contractual duties. Accordingly, they may have conflicts of interest in determining to which entity a particular
business opportunity should be presented. These conflicts may not be resolved in our favor and a potential target business may be presented
to another entity prior to its presentation to us. Our Second A&amp;R Charter provides that we renounce our interest in any corporate
opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity
as a director or officer of our company and such opportunity is one we are legally and contractually permitted to undertake and would
otherwise be reasonable for us to pursue.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Our executive officers, directors, security
holders and their respective affiliates may have competitive pecuniary interests that conflict with our interests.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have not adopted a policy
that expressly prohibits our directors, executive officers, security holders or affiliates from having a direct or indirect pecuniary
or financial interest in any investment to be acquired or disposed of by us or in any transaction to which we are a party or have an interest.
We also do not have a policy that expressly prohibits any such persons from engaging for their own account in business activities of the
types conducted by us. Accordingly, such persons or entities may have a conflict between their interests and ours.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Increased costs of capital could adversely
affect Pogo&#8217;s business.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pogo&#8217;s business and
ability to make acquisitions could be harmed by factors such as the availability, terms, and cost of capital, increases in interest rates
or a reduction in its credit rating. Changes in any one or more of these factors could cause Pogo&#8217;s cost of doing business to increase,
limit its access to capital, limit its ability to pursue acquisition opportunities, and place it at a competitive disadvantage. A significant
reduction in the availability of capital could materially and adversely affect Pogo&#8217;s ability to achieve its planned growth and
operating results.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">For example, during 2022 and
the first half of 2023, the Federal Reserve raised the target range for the federal funds rate by 525 basis points to a range of 5.25%
to 5.50% as of August, 2023. Furthermore, the Federal Reserve has signaled that additional rate increases are likely to occur for the
foreseeable future. An increase in the interest rates associated with our floating rate debt would increase our debt service costs and
affect our results of operations and cash flow available for payments of our debt obligations. In addition, an increase in interest rates
could adversely affect our future ability to obtain financing or materially increase the cost of any additional financing.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Pogo may be involved in legal proceedings
that could result in substantial liabilities.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Like many crude oil and natural
gas companies, Pogo may from time to time be involved in various legal and other proceedings, such as title, royalty or contractual disputes,
regulatory compliance matters and personal injury or property damage matters, in the ordinary course of its business. Such legal proceedings
are inherently uncertain and their results cannot be predicted. Regardless of the outcome, such proceedings could have an adverse impact
on Pogo because of legal costs, diversion of management and other personnel and other factors. In addition, it is possible that a resolution
of one or more such proceedings could result in liability, penalties or sanctions, as well as judgments, consent decrees or orders requiring
a change in Pogo&#8217;s business practices, which could materially and adversely affect its business, operating results and financial
condition. Accruals for such liability, penalties or sanctions may be insufficient. Judgments and estimates to determine accruals or range
of losses related to legal and other proceedings could change from one period to the next, and such changes could be material.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>The historical financial results of EON
and the unaudited pro forma condensed consolidated combined financial information included elsewhere in this report may not be indicative
of what EON&#8217;s actual financial position or results of operations would have been if it were a public company.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The historical financial results
of EON included in this report do not reflect the financial condition, results of operations or cash flows it would have achieved as a
public company during the periods presented or those we will achieve in the future. Our future financial condition, results of operations
and cash flows could be materially different from amounts reflected in EON&#8217;s historical financial statements included elsewhere
in this report. As such, it may be difficult for investors to compare our future results to historical results or to evaluate its relative
performance or trends in its business.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Similarly, the unaudited pro
forma condensed consolidated combined financial information in this report is presented for illustrative purposes only and has been prepared
based on a number of assumptions including, but not limited to, those assumptions described in the accompanying unaudited pro forma condensed
consolidated combined financial statements. Accordingly, such pro forma financial information may not be indicative of our future operating
or financial performance and&#160;our actual financial condition and results of operations may vary materially from the pro forma results
of operations and balance sheet contained elsewhere in this report, including as a result of such assumptions not being accurate.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Risks Related to Our Industry</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>A substantial majority of Pogo&#8217;s revenues
from crude oil and gas producing activities are derived from its operating properties that are based on the price at which crude oil and
natural gas produced from the acreage underlying its interests are sold. Prices of crude oil and natural gas are volatile due to factors
beyond Pogo&#8217;s control. A substantial or extended decline in commodity prices may adversely affect Pogo&#8217;s business, financial
condition, results of operations and cash flows.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pogo&#8217;s revenues, operating
results, discretionary cash flows, profitability, liquidity and the carrying value of its interests depend significantly upon the prevailing
prices for crude oil and natural gas. Historically, crude oil and natural gas prices and their applicable basis differentials have been
volatile and are subject to fluctuations in response to changes in supply and demand, market uncertainty and a variety of additional factors
that are beyond Pogo&#8217;s control, including:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the regional, domestic foreign supply of and demand for crude oil and natural gas;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the level of prices and market expectations about future prices of crude oil and natural gas;</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the ability of members of OPEC and its allies and other oil exporting nations to agree to and maintain crude oil price and production controls;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
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    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">speculative trading in crude oil and natural gas derivative contracts;</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
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    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the level of consumer product demand;</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
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    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">technological advances affecting energy consumption, energy storage and energy supply;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
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    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">domestic and foreign governmental regulations and taxes;</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the impact of energy conservation efforts;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the price and availability of alternative fuels; and</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">overall domestic and global economic conditions.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt"></p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">These factors and the volatility
of the energy markets make it extremely difficult to predict future crude oil and natural gas price movements with any certainty. For
example, during the past five&#160;years, the posted price for West Texas Intermediate (&#8220;WTI&#8221;) light sweet crude oil has ranged
from a historic, record low price of negative ($36.98) per barrel (&#8220;Bbl&#8221;) in April&#160;2020 to a high of $123.64 per Bbl
in March&#160;2022, and the Henry Hub spot market price for natural gas has ranged from a low of $1.33 per metric million British thermal
unit (&#8220;MMBtu&#8221;) in September&#160;2020 to a high of $23.86 per MMBtu in February&#160;2021. Certain actions by OPEC+ in the
first half of 2020, combined with the impact of the continued outbreak of the COVID-19&#160;pandemic and a shortage in available storage
for hydrocarbons in the U.S., contributed to the historic low price for crude oil in April&#160;2020. While the prices for crude oil have
begun to stabilize and also increase, such prices have historically remained volatile, which has adversely affected the prices at which
production from Pogo&#8217;s properties is sold and may continue to do so in the future. This, in turn, has and will materially affect
the amount of production payments that Pogo receives.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Any substantial decline in
the price of crude oil and natural gas, or prolonged period of low commodity prices will materially adversely affect Pogo&#8217;s business,
financial condition, results of operations and cash flows. In addition, lower crude oil and natural gas may reduce the amount of crude
oil and natural gas that can be produced economically, which may reduce its Pogo&#8217;s willingness to develop its properties. This may
result in Pogo having to make substantial downward adjustments to its estimated proved reserves, which could negatively impact its ability
to fund its operations. If this occurs or if production estimates change or exploration or development results deteriorate, the successful
efforts method of accounting principles may require Pogo to write down, as a non-cash&#160;charge to earnings, the carrying value of its
crude oil and natural gas properties. Pogo could also determine during periods of low commodity prices to shut in or curtail production
from wells on Pogo&#8217;s properties. In addition, Pogo could determine during periods of low commodity prices to plug and abandon marginal
wells that otherwise may have been allowed to continue to produce for a longer period under conditions of higher prices. Specifically,
they may abandon any well if they reasonably believe that the well can no longer produce crude oil or natural gas in commercially paying
quantities. Pogo may choose to use various derivative instruments in connection with anticipated crude oil and natural gas to minimize
the impact of commodity price fluctuations. However, Pogo cannot hedge the entire exposure of its operations from commodity price volatility.
To the extent Pogo does not hedge against commodity price volatility, or its hedges are not effective, Pogo&#8217;s results of operations
and financial position may be diminished.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>If commodity prices decrease to a level
such that Pogo&#8217;s future undiscounted cash flows from its properties are less than their carrying value, Pogo may be required to
take write-downs of the carrying values of its properties.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Accounting rules require that
Pogo periodically review the carrying value of its properties for possible impairment. Based on specific market factors and circumstances
at the time of prospective impairment reviews, production data, economics and other factors, Pogo may be required to write down the carrying
value of its properties. Pogo evaluates the carrying amount of its proved oil and natural gas properties for impairment whenever events
or changes in circumstances indicate that a property&#8217;s carrying amount may not be recoverable. If the carrying value exceeds the
estimated undiscounted future cash flows Pogo would estimate the fair value of its properties and record an impairment charge for any
excess of the carrying value of the properties over the estimated fair value of the properties. Factors used to estimate fair value may
include estimates of proved reserves, future commodity prices, future production estimates and a commensurate discount rate. The risk
that Pogo will be required to recognize impairments of its crude oil and natural gas properties increases during periods of low commodity
prices. In addition, impairments would occur if Pogo were to experience sufficient downward adjustments to its estimated proved reserves
or the present value of estimated future net revenues. An impairment recognized in one period may not be reversed in a subsequent period.
Pogo may incur impairment charges in the future, which could materially adversely affect its results of operations for the periods in
which such charges are taken.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt"></p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>The unavailability, high cost or shortages
of rigs, equipment, raw materials, supplies or personnel may restrict or result in increased costs to develop and operate Pogo&#8217;s
properties.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The crude oil and natural
gas industry is cyclical, which can result in shortages of drilling/workover rigs, equipment, raw materials (particularly water and sand
and other proppants), supplies and personnel. When shortages occur, the costs and delivery times of rigs, equipment and supplies increase
and demand for, and wage rates of, qualified drilling/workover rig crews also rise with increases in demand. Pogo cannot predict whether
these conditions will exist in the future and, if so, what their timing and duration will be. In accordance with customary industry practice,
Pogo relies on independent third-party&#160;service providers to provide many of the services and equipment necessary to drill new development
wells. If Pogo is unable to secure a sufficient number of drilling/workover rigs at reasonable costs, Pogo&#8217;s financial condition
and results of operations could suffer. Shortages of drilling/workover rigs, equipment, raw materials, supplies, personnel, trucking services,
tubulars, hydraulic fracturing and completion services and production equipment could delay or restrict Pogo&#8217;s development operations,
which in turn could have a material adverse effect on Pogo&#8217;s financial condition, results of operations and cash flows.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>The marketability of crude oil and natural
gas production is dependent upon transportation and processing and refining facilities, which Pogo cannot control. Any limitation in the
availability of those facilities could interfere with Pogo&#8217;s ability to market its&#160;production and could harm Pogo&#8217;s business.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The marketability of Pogo&#8217;s
production depends in part on the availability, proximity and capacity of pipelines, gathering lines, tanker trucks and other transportation
methods, and processing and refining facilities owned by third parties. Pogo does not control these third-party&#160;facilities and Pogo&#8217;s
access to them may be limited or denied. Insufficient production from the wells on Pogo&#8217;s acreage or a significant disruption in
the availability of third-party&#160;transportation facilities or other production facilities could adversely impact Pogo&#8217;s ability
to deliver, to market or produce oil and natural gas and thereby cause a significant interruption in Pogo&#8217;s operations. If they
are unable, for any sustained period, to implement acceptable delivery or transportation arrangements or encounter production related
difficulties, they may be required to shut in or curtail production. In addition, the amount of crude oil that can be produced and sold
is subject to curtailment in certain other circumstances outside of Pogo&#8217;s control, such as pipeline interruptions due to scheduled
and unscheduled maintenance, excessive pressure, physical damage or lack of available capacity on these systems, tanker truck availability
and extreme weather conditions. Also, production from Pogo&#8217;s wells may be insufficient to support the construction of pipeline facilities,
and the shipment of Pogo&#8217;s crude oil and natural gas on third-party&#160;pipelines may be curtailed or delayed if it does not meet
the quality specifications of the pipeline owners. The curtailments arising from these and similar circumstances may last from a few&#160;days
to several&#160;months. In many cases, Pogo is provided only with limited, if any, notice as to when these circumstances will arise and
their duration. Any significant curtailment in gathering system or transportation, processing or refining-facility&#160;capacity, or an
inability to obtain favorable terms for delivery of the crude oil and natural gas produced from Pogo&#8217;s acreage, could reduce Pogo&#8217;s
ability to market the production from Pogo&#8217;s properties and have a material adverse effect on Pogo&#8217;s financial condition,
results of operations and cash flows. Pogo&#8217;s access to transportation options and the prices Pogo receives can also be affected
by federal and state regulation&#160;&#8212;&#160;including regulation of crude oil and natural gas production, transportation and pipeline
safety&#160;&#8212;&#160;as well by general economic conditions and changes in supply and demand.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, the third parties
on whom Pogo relies for transportation services are subject to complex federal, state, tribal and local laws that could adversely affect
the cost, manner or feasibility of conducting Pogo&#8217;s business.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><!-- Field: Page; Sequence: 27; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->21<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt"></p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Drilling for and producing crude oil and
natural gas are high-risk activities with many uncertainties that may materially adversely affect Pogo&#8217;s business, financial condition,
results of operations and cash flows.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The development drilling activities
of Pogo&#8217;s properties will be subject to many risks. For example, Pogo will not be able to assure you that wells drilled by the E&amp;P
operators of its properties will be productive. Drilling for crude oil and natural gas often involves unprofitable efforts, not only from
dry wells but also from wells that are productive but do not produce sufficient crude oil and natural gas to return a profit at then realized
prices after deducting drilling, operating and other costs. The seismic data and other technologies used do not provide conclusive knowledge
prior to drilling a well that crude oil and natural gas are present or that a well can be produced economically. The costs of exploration,
exploitation and development activities are subject to numerous uncertainties beyond Pogo&#8217;s control and increases in those costs
can adversely affect the economics of a project. Further, Pogo&#8217;s development drilling and producing operations may be curtailed,
delayed, canceled or otherwise negatively impacted as a result of other factors, including:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">loss of drilling fluid circulation;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">facility or equipment malfunctions;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">unexpected operational events;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">shortages or delivery delays of equipment and services;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">compliance with environmental and other governmental requirements; and</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">adverse weather conditions, including the recent winter storms in February&#160;2021 that adversely affected operator activity and production volumes in the southern United&#160;States, including in the Delaware Basin.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Any of these risks can cause
substantial losses, including personal injury or loss of life, damage to or destruction of property, natural resources and equipment,
pollution, environmental contamination or loss of wells and other regulatory penalties. In the event that planned operations, including
the drilling of development wells, are delayed or cancelled, or existing wells or development wells have lower than anticipated production
due to one or more of the factors above or for any other reason, Pogo&#8217;s financial condition, results of operations and cash flows
may be materially adversely affected.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Competition in the crude oil and natural
gas industry is intense, which may adversely affect Pogo&#8217;s ability to succeed.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The crude oil and natural
gas industry is intensely competitive, and Pogo&#8217;s properties compete with other companies that may have greater resources. Many
of these companies explore for and produce crude oil and natural gas, carry on midstream and refining operations, and market petroleum
and other products on a regional, national or worldwide basis. In addition, these companies may have a greater ability to continue exploration
activities during periods of low crude oil and natural gas market prices. Pogo&#8217;s larger competitors may be able to absorb the burden
of present and future federal, state, local and other laws and regulations more easily than Pogo can, which would adversely affect Pogo&#8217;s
competitive position. Pogo may have fewer financial and human resources than many companies in Pogo&#8217;s industry and may be at a disadvantage
in bidding producing crude oil and natural gas properties. Furthermore, the crude oil and natural gas industry has experienced recent
consolidation among some operators, which has resulted in certain instances of combined companies with larger resources. Such combined
companies may compete against Pogo and thus limit Pogo&#8217;s ability to acquire additional properties and add reserves.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>A deterioration in general economic, business,
political or industry conditions would materially adversely affect Pogo&#8217;s results of operations, financial condition and cash flows.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Concerns over global economic
conditions, energy costs, geopolitical issues, the impacts of the COVID-19&#160;pandemic, inflation, the availability and cost of credit
and slow economic growth in the United&#160;States have contributed to economic uncertainty and diminished expectations for the global
economy. Additionally, acts of protest and civil unrest have caused economic and political disruption in the United&#160;States. Meanwhile,
continued hostilities in the Middle East, Ukraine and the occurrence or threat of terrorist attacks in the United&#160;States or other
countries could adversely affect the economies of the United&#160;States and other countries. Concerns about global economic growth have
had a significant adverse impact on global financial markets and commodity prices. An oversupply and decreased demand of crude oil in
2020 led to a severe decline in worldwide crude oil prices in 2020.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If the economic climate in
the United&#160;States or abroad deteriorates, worldwide demand for petroleum products could further diminish, which could impact the
price at which crude oil and natural gas from Pogo&#8217;s properties are sold, affect the ability of Pogo&#8217;s to continue operations
and ultimately materially adversely impact Pogo&#8217;s results of operations, financial condition and cash flows.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Conservation measures, technological advances
and increasing attention to ESG matters could materially reduce demand for crude oil and natural gas, availability of capital and adversely
affect Pogo&#8217;s results of operations.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Fuel conservation measures,
alternative fuel requirements, increasing consumer demand for alternatives to crude oil and natural gas, technological advances in fuel
economy and energy-generation&#160;devices could reduce demand for crude oil and natural gas. The impact of the changing demand for crude
oil and natural gas services and products may have a material adverse effect on Pogo&#8217;s business, financial condition, results of
operations and cash flows. It is also possible that the concerns about the production and use of fossil fuels will reduce the sources
of financing available to Pogo.&#160;For example, certain segments of the investor community have developed negative sentiment towards
investing in the oil and gas industry. Recent equity returns in the sector versus other industry sectors have led to lower oil and gas
representation in certain key equity market indices. In addition, some investors, including investment advisors and certain sovereign
wealth, pension funds, university endowments and family foundations, have stated policies to divest from, or not provide funding to, the
oil and gas sector based on their social and environmental considerations. Furthermore, organizations that provide information to investors
on corporate governance and related matters have developed ratings processes for evaluating companies on their approach to environmental,
social and governance (&#8220;ESG&#8221;) matters. Such ratings are used by some investors and other financial institutions to inform
their investment, financing and voting decisions, and unfavorable ESG ratings may lead to increased negative sentiment toward oil and
gas companies from such institutions. Additionally, the SEC proposed rules on climate change disclosure requirements for public companies
which, if adopted as proposed, could result in substantial compliance costs. Certain other stakeholders have also pressured commercial
and investment banks to stop financing oil and gas and related infrastructure projects. Such developments, including environmental activism
and initiatives aimed at limiting climate change and reducing air pollution, could result in downward pressure on the stock prices of
oil and gas companies, and also adversely affect Pogo&#8217;s availability of capital.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Risks Related to Environmental and Regulatory Matters</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Crude oil and natural gas operations are
subject to various governmental laws and regulations. Compliance with these laws and regulations can be burdensome and expensive for Pogo,
and failure to comply could result in Pogo incurring significant liabilities, either of which may impact its willingness to develop Pogo&#8217;s
interests.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pogo&#8217;s activities on
the properties in which Pogo holds interests are subject to various federal, state and local governmental regulations that may change
from time to time in response to economic and political conditions. Matters subject to regulation include drilling operations, production
and distribution activities, discharges or releases of pollutants or wastes, plugging and abandonment of wells, maintenance and decommissioning
of other facilities, the spacing of wells, unitization and pooling of properties and taxation. From time to time, regulatory agencies
have imposed price controls and limitations on production by restricting the rate of flow of crude oil and natural gas wells below actual
production capacity to conserve supplies of crude oil and natural gas. For example, in January&#160;2021, President Biden signed an Executive
Order that, among other things, instructed the Secretary of the Interior to pause new oil and natural gas leases on public lands or in
offshore waters pending completion of a comprehensive review and reconsideration of federal oil and natural gas permitting and leasing
practices. In August 2022, a federal judge in Louisiana issued a permanent injunction against the temporary halt to the leasing of federal
lands for oil and gas drilling in the thirteen states that challenged the Executive Order. In April 2022, the Biden Administration announced
it would resume selling leases to drill for oil and gas on federal lands, but with an 80% reduction in the number of acres offered and
an increase in the royalties companies must pay to drill. The Inflation Reduction Act, signed into law in August of 2022, expanded oil
and gas lease sales off the coast of Alaska and in the Gulf of Mexico. Substantially all of Pogo&#8217;s interests are located on state
or federal lands, therefore Pogo cannot predict the full impact of these developments or whether the Biden Administration may pursue further
restrictions. President Biden also issued an Executive Order directing all federal agencies to review and take action to address any federal
regulations, orders, guidance documents, policies and any similar agency actions during the prior administration that may be inconsistent
with the current administration&#8217;s policies. The United States Environmental Protection Agency has proposed strict new methane emission
regulations for certain oil and gas facilities and the IRA establishes a charge on methane emissions above certain limits from the same
facilities. Further actions of President Biden, and the Biden Administration, including actions focused on addressing climate change,
may negatively impact oil and gas operations and favor renewable energy projects in the United&#160;States, which may negatively impact
the demand for oil and natural gas.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, the production,
handling, storage and transportation of crude oil and natural gas, as well as the remediation, emission and disposal of crude oil and
natural gas wastes, by-products&#160;thereof and other substances and materials produced or used in connection with crude oil and natural
gas operations are subject to regulation under federal, state and local laws and regulations primarily relating to protection of worker
health and safety, natural resources and the environment. Failure to comply with these laws and regulations may result in the assessment
of sanctions on Pogo, including administrative, civil or criminal penalties, permit revocations, requirements for additional pollution
controls and injunctions limiting or prohibiting some or all of Pogo&#8217;s operations on its properties. Moreover, these laws and regulations
have generally imposed increasingly strict requirements related to water use and disposal, air pollution control, species protection,
and waste management, among other matters.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Laws and regulations governing
E&amp;P may also affect production levels. Pogo must comply with federal and state laws and regulations governing conservation matters,
including, but not limited to:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">provisions related to the unitization or pooling of the crude oil and natural gas properties;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the establishment of maximum rates of production from wells;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the spacing of wells;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the plugging and abandonment of wells; and</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the removal of related production equipment.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Additionally, federal and
state regulatory authorities may expand or alter applicable pipeline-safety&#160;laws and regulations, compliance with which may require
increased capital costs for third-party&#160;crude oil and natural gas transporters. These transporters may attempt to pass on such costs
to Pogo, which in turn could affect profitability on the properties in which Pogo owns an interest.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pogo must also comply with
laws and regulations prohibiting fraud and market manipulations in energy markets. To the extent Pogo&#8217;s properties are shippers
on interstate pipelines, they must comply with the tariffs of those pipelines and with federal policies related to the use of interstate
capacity.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pogo may be required to make
significant expenditures to comply with the governmental laws and regulations described above and may be subject to potential fines and
penalties if they are found to have violated these laws and regulations. Pogo believes the trend of more expansive and stricter environmental
legislation and regulations will continue. The laws and regulations that affect Pogo&#160;could increase the operating costs of Pogo and
delay production and may ultimately impact Pogo&#8217;s ability and willingness to develop its properties.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Federal and state legislative and regulatory
initiatives relating to hydraulic fracturing could cause Pogo to incur increased costs, additional operating restrictions or delays and
have fewer potential development locations.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pogo engages in hydraulic
fracturing. Hydraulic fracturing is a common practice that is used to stimulate production of hydrocarbons from tight formations, including
shales. The process involves the injection of water, sand and chemicals under pressure into formations to fracture the surrounding rock
and stimulate production. Currently, hydraulic fracturing is generally exempt from regulation under the Underground Injection Control
program of the U.S.&#160;Safe Drinking Water Act (&#8220;SDWA&#8221;) and is typically regulated by state oil and gas commissions or similar
agencies.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">However, several federal agencies
have asserted regulatory authority over certain aspects of the process. For example, in June&#160;2016, the Environmental Protection Agency
(the &#8220;EPA&#8221;) published an effluent limit guideline final rule prohibiting the discharge of wastewater from onshore unconventional
oil and gas extraction facilities to publicly owned wastewater treatment plants. Also, from time to time, legislation has been introduced,
but not enacted, in the U.S.&#160;Congress to provide for federal regulation of hydraulic fracturing and to require disclosure of the
chemicals used in the hydraulic fracturing process. This or other federal legislation related to hydraulic fracturing may be considered
again in the future, though Pogo cannot predict the extent of any such legislation at this time.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Moreover, some states and
local governments have adopted, and other governmental entities are considering adopting, regulations that could impose more stringent
permitting, disclosure and well-construction&#160;requirements on hydraulic fracturing operations, including states in which Pogo&#8217;s
properties are located. For example, Texas, among others, has adopted regulations that impose new or more stringent permitting, disclosure,
disposal and well construction requirements on hydraulic fracturing operations. States could also elect to prohibit high volume hydraulic
fracturing altogether. In addition to state laws, local land use restrictions, such as city ordinances, may restrict drilling in general
and/or hydraulic fracturing in particular.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Increased regulation and attention
given to the hydraulic fracturing process, including the disposal of produced water gathered from drilling and production activities,
could lead to greater opposition to, and litigation concerning, crude oil and natural gas production activities using hydraulic fracturing
techniques in areas where Pogo owns properties. Additional legislation or regulation could also lead to operational delays or increased
operating costs for Pogo in the production of crude oil and natural gas, including from the development of shale plays, or could make
it more difficult for Pogo to perform hydraulic fracturing. The adoption of any federal, state or local laws or the implementation of
regulations regarding hydraulic fracturing could potentially cause a decrease in Pogo&#8217;s completion of new crude oil and natural
gas wells and result in an associated decrease in the production attributable to Pogo&#8217;s interests, which could have a material adverse
effect on Pogo&#8217;s business, financial condition and results of operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Legislation or regulatory initiatives intended
to address seismic activity could restrict Pogo&#8217;s development and production activities, as well as Pogo&#8217;s ability to dispose
of produced water gathered from such activities, which could have a material adverse effect on their future business, which in turn could
have a material adverse effect on Pogo&#8217;s business.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">State and federal regulatory
agencies have recently focused on a possible connection between hydraulic fracturing related activities, particularly the underground
injection of wastewater into disposal wells, and the increased occurrence of seismic activity, and regulatory agencies at all levels are
continuing to study the possible linkage between oil and gas activity and induced seismicity. For example, in 2015, the United&#160;States
Geological Study (&#8220;USGS&#8221;) identified eight states, including New Mexico, Oklahoma and Texas, with areas of increased rates
of induced seismicity that could be attributed to fluid injection or oil and gas extraction.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, a number of lawsuits
have been filed alleging that disposal well operations have caused damage to neighboring properties or otherwise violated state and federal
rules regulating waste disposal. In response to these concerns, regulators in some states are seeking to impose additional requirements,
including requirements in the permitting of produced water disposal wells or otherwise to assess the relationship between seismicity and
the use of such wells. For example, the Texas Railroad Commission has previously published a rule governing permitting or re-permitting&#160;of
disposal wells that would require, among other things, the submission of information on seismic events occurring within a specified radius
of the disposal well location, as well as logs, geologic cross sections and structure maps relating to the disposal area in question.
If the permittee or an applicant of a disposal well permit fails to demonstrate that the produced water or other fluids are confined to
the disposal zone or if scientific data indicates such a disposal well is likely to be or determined to be contributing to seismic activity,
then the agency may deny, modify, suspend or terminate the permit application or existing operating permit for that well. The Texas Railroad
Commission has used this authority to deny permits for waste disposal wells. In some instances, regulators may also order that disposal
wells be shut in. In late 2021, the Texas Railroad Commission issued a notice to operators of disposal wells in the Midland area to reduce
saltwater disposal well actions and provide certain data to the commission. Separately, in November&#160;2021, New Mexico implemented
protocols requiring operators to take various actions within a specified proximity of certain seismic activity, including a requirement
to limit injection rates if a seismic event is of a certain magnitude. As a result of these developments, Pogo may be required to curtail
operations or adjust development plans, which may adversely impact Pogo&#8217;s business.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pogo will likely dispose of
produced water volumes gathered from their production operations by injecting it into wells pursuant to permits issued by governmental
authorities overseeing such disposal activities. While these permits will be issued pursuant to existing laws and regulations, these legal
requirements are subject to change, which could result in the imposition of more stringent operating constraints or new monitoring and
reporting requirements, owing to, among other things, concerns of the public or governmental authorities regarding such gathering or disposal
activities. The adoption and implementation of any new laws or regulations that restrict Pogo&#8217;s ability to use hydraulic fracturing
or dispose of produced water gathered from drilling and production activities by limiting volumes, disposal rates, disposal well locations
or otherwise, or requiring them to shut down disposal wells, could have a material adverse effect on Pogo&#8217;s business, financial
condition and results of operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Restrictions on the ability of Pogo to obtain
water may have an adverse effect on Pogo&#8217;s financial condition, results of operations and cash flows.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Water is an essential component
of crude oil and natural gas production during both the drilling and hydraulic fracturing processes. Over the past several&#160;years,
parts of the country, and in particular Texas, have experienced extreme drought conditions. As a result of this severe drought, some local
water districts have begun restricting the use of water subject to their jurisdiction for hydraulic fracturing to protect local water
supply. Such conditions may be exacerbated by climate change. If Pogo is unable to obtain water to use in their operations from local
sources, or if Pogo is unable to effectively utilize flowback water, they may be unable to economically drill for or produce crude oil
and natural gas from Pogo&#8217;s properties, which could have an adverse effect on Pogo&#8217;s financial condition, results of operations
and cash flows.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Pogo&#8217;s operations are subject to a
series of risks arising from climate change.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Climate change continues to
attract considerable public and scientific attention. As a result, numerous proposals have been made and are likely to continue to be
made at the international, national, regional and state levels of government to monitor and limit emissions of carbon dioxide, methane
and other &#8220;greenhouse gases&#8221; (&#8220;GHGs&#8221;). These efforts have included consideration of cap-and-trade&#160;programs,
carbon taxes, GHG reporting and tracking programs and regulations that directly limit GHG emissions from certain sources.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In the United&#160;States,
no comprehensive climate change legislation has been implemented at the federal level. However, President Biden has highlighted addressing
climate change as a priority of his administration and has issued several Executive Orders addressing climate change. Moreover, following
the U.S.&#160;Supreme Court finding that GHG emissions constitute a pollutant under the Clean Air Act (the &#8220;CAA&#8221;), the EPA
has adopted regulations that, among other things, establish construction and operating permit reviews for GHG emissions from certain large
stationary sources, require the monitoring and annual reporting of GHG emissions from certain petroleum and natural gas system sources
in the United&#160;States, and together with the U.S.&#160;Department of Transportation (the &#8220;DOT&#8221;), implementing GHG emissions
limits on vehicles manufactured for operation in the United&#160;States. The regulation of methane from oil and gas facilities has been
subject to uncertainty in recent&#160;years. In September&#160;2020, the Trump Administration revised prior regulations to rescind certain
methane standards and remove the transmission and storage segments from the source category for certain regulations. However, subsequently,
the U.S.&#160;Congress approved, and President Biden signed into law, a resolution under the Congressional Review Act to repeal the September&#160;2020
revisions to the methane standards, effectively reinstating the prior standards. Additionally, in November&#160;2021, the EPA issued a
proposed rule that, if finalized, would establish OOOO(b)&#160;new source and OOOO(c)&#160;first-time&#160;existing source standards of
performance for methane and volatile organic compound emissions for oil and gas facilities. Operators of affected facilities will have
to comply with specific standards of performance to include leak detection using optical gas imaging and subsequent repair requirement,
and reduction of emissions by 95% through capture and control systems. The EPA issued supplemental rules regarding methane emissions on
December&#160;6, 2022. The IRA established the Methane Emissions Reduction Program, which imposes a charge on methane emissions from certain
petroleum and natural gas facilities, which may apply to our operations in the future and may require us to expend material sums. We cannot
predict the scope of any final methane regulatory requirements or the cost to comply with such requirements. Given the long-term&#160;trend
toward increasing regulation, future federal GHG regulations of the oil and gas industry remain a significant possibility.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Separately, various states
and groups of states have adopted or are considering adopting legislation, regulation or other regulatory initiatives that are focused
on such areas as GHG cap and trade programs, carbon taxes, reporting and tracking programs, and restriction of emissions. For example,
New Mexico has adopted regulations to restrict the venting or flaring of methane from both upstream and midstream operations. At the international
level, the United Nations-sponsored&#160;&#8220;Paris Agreement&#8221; requires member states to submit non-binding, individually-determined&#160;reduction
goals known as Nationally Determined Contributions every five&#160;years after 2020. President Biden has recommitted the United&#160;States
to the Paris Agreement and, in April&#160;2021, announced a goal of reducing the United&#160;States&#8217; emissions by&#160;50-52% below
2005 levels by 2030. Additionally, at the 26<sup>th</sup>&#160;Conference of the Parties to the United Nations</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Framework Convention on Climate
Change (&#8220;COP26&#8221;) in Glasgow in November&#160;2021, the United&#160;States and the European Union jointly announced the launch
of a Global Methane Pledge, an initiative committing to a collective goal of reducing global methane emissions by at least 30% from 2020
levels by 2030, including &#8220;all feasible reductions&#8221; in the energy sector. The full impact of these actions cannot be predicted
at this time.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Governmental, scientific,
and public concern over the threat of climate change arising from GHG emissions has resulted in increasing political risks in the United&#160;States,
including climate change related pledges made by certain candidates now in public office. On January&#160;27, 2021, President Biden issued
an Executive Order that calls for substantial action on climate change, including, among other things, the increased use of zero-emission&#160;vehicles
by the federal government, the elimination of subsidies provided to the fossil fuel industry, and increased emphasis on climate-related&#160;risks
across government agencies and economic sectors. The Biden Administration has also called for restrictions on leasing on federal land,
including the Department of the Interior&#8217;s publication of a report recommending various changes to the federal leasing program,
though many such changes would require Congressional action. Substantially all of Pogo&#8217;s interests are located on federal and state
lands, but Pogo cannot predict the full impact of these developments or whether the Biden Administration may pursue further restrictions.
Other actions that could be pursued by the Biden Administration may include the imposition of more restrictive requirements for the establishment
of pipeline infrastructure or the permitting of liquefied natural gas (&#8220;LNG&#8221;) export facilities, as well as more restrictive
GHG emission limitations for oil and gas facilities. Litigation risks are also increasing as a number of entities have sought to bring
suit against various oil and natural gas companies in state or federal court, alleging among other things, that such companies created
public nuisances by producing fuels that contributed to climate change or alleging that the companies have been aware of the adverse effects
of climate change for some time but defrauded their investors or customers by failing to adequately disclose those impacts.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">There are also increasing
financial risks for fossil fuel producers as shareholders currently invested in fossil-fuel&#160;energy companies may elect in the future
to shift some or all of their investments into non-fossil&#160;fuel related sectors. Institutional lenders who provide financing to fossil
fuel energy companies also have become more attentive to sustainable lending practices and some of them may elect not to provide funding
for fossil fuel energy companies. For example, at COP26, the Glasgow Financial Alliance for Net Zero (&#8220;GFANZ&#8221;) announced that
commitments from over 450 firms across 45 countries had resulted in over $130&#160;trillion in capital committed to net zero goals. The
various sub-alliances&#160;of GFANZ generally require participants to set short-term, sector-specific&#160;targets to transition their
financing, investing, and/or underwriting activities to net zero emissions by 2050. There is also a risk that financial institutions will
be required to adopt policies that have the effect of reducing the funding provided to the fossil fuel sector. In late 2020, the Federal
Reserve announced that is has joined the Network for Greening the Financial System, a consortium of financial regulators focused on addressing
climate-related&#160;risks in the financial sector. Subsequently, in November&#160;2021, the Federal Reserve issued a statement in support
of the efforts of the Network for Greening the Financial System to identify key issues and potential solutions for the climate-related&#160;challenges
most relevant to central banks and supervisory authorities. Limitation of investments in and financing for fossil fuel energy companies
could result in the restriction, delay or cancellation of drilling programs or development or production activities. Additionally, the
SEC announced its intention to promulgate rules requiring climate disclosures. Although the form and substance of these requirements is
not yet known, this may result in additional costs to comply with any such disclosure requirements.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The adoption and implementation
of new or more stringent international, federal or state legislation, regulations or other regulatory initiatives that impose more stringent
standards for GHG emissions from the oil and natural gas sector or otherwise restrict the areas in which this sector may produce oil and
natural gas or generate the GHG emissions could result in increased costs of compliance or costs of consuming, and thereby reduce demand
for oil and natural gas, which could reduce the profitability of Pogo&#8217;s interests. Additionally, political, litigation and financial
risks may result in Pogo restricting or cancelling production activities, incurring liability for infrastructure damages as a result of
climatic changes, or impairing their ability to continue to operate in an economic manner, which also could reduce the profitability of
its interests. One or more of these developments could have a material adverse effect on Pogo&#8217;s business, financial condition and
results of operation.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Climate change may also result
in various physical risks, such as the increased frequency or intensity of extreme weather events or changes in meteorological and hydrological
patterns, that could adversely impact our operations, as well as those of our operators and their supply chains. Such physical risks may
result in damage to operators&#8217; facilities or otherwise adversely impact their operations, such as if they become subject to water
use curtailments in response to drought, or demand for their products, such as to the extent warmer winters reduce the demand for energy
for heating purposes.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Increased attention to ESG matters and conservation
measures may adversely impact Pogo&#8217;s business.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Increasing attention to climate
change, societal expectations on companies to address climate change, investor and societal expectations regarding voluntary ESG disclosures
and consumer demand for alternative forms of energy may result in increased costs, reduced demand for Pogo&#8217;s products, reduced profits,
and increased investigations and litigation. Increasing attention to climate change and environmental conservation, for example, may result
in demand shifts for oil and natural gas products and additional governmental investigations and private litigation against Pogo.&#160;Additionally,
the SEC proposed rules on climate change disclosure requirements for public companies which, if adopted as proposed, could result in substantial
compliance costs. To the extent that societal pressures or political or other factors are involved, it is possible that such liability
could be imposed without regard to Pogo&#8217;s causation of, or contribution to, the asserted damage, or to other mitigating factors.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Moreover, while Pogo may create
and publish voluntary disclosures regarding ESG matters from time to time, many of the statements in those voluntary disclosures are based
on hypothetical expectations and assumptions that may or may not be representative of current or actual risks or events or forecasts of
expected risks or events, including the costs associated therewith. Such expectations and assumptions are necessarily uncertain and may
be prone to error or subject to misinterpretation given the long timelines involved and the lack of an established single approach to
identifying, measuring and reporting on many ESG matters.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, organizations
that provide information to investors on corporate governance and related matters have developed ratings processes for evaluating companies
on their approach to ESG matters. Such ratings are used by some investors to inform their investment and voting decisions. Unfavorable
ESG ratings and recent activism directed at shifting funding away from companies with energy-related&#160;assets could lead to increased
negative investor sentiment toward Pogo and its industry and to the diversion of investment to other industries, which could have a negative
impact on Pogo&#8217;s access to and costs of capital. Also, institutional lenders may decide not to provide funding for fossil fuel energy
companies based on climate change related concerns, which could affect Pogo&#8217;s access to capital for potential growth projects.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Pogo&#8217;s results of operations may be
materially impacted by efforts to transition to a lower-carbon economy.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Concerns over the risk of
climate change have increased the focus by global, regional, national, state and local regulators on GHG emissions, including carbon dioxide
emissions, and on transitioning to a lower-carbon&#160;future. A number of countries and states have adopted, or are considering the adoption
of, regulatory frameworks to reduce greenhouse gas emissions. These regulatory measures may include, among others, adoption of cap and
trade regimes, carbon taxes, increased efficiency standards, prohibitions on the sales of new automobiles with internal combustion engines,
and incentives or mandates for battery-powered&#160;automobiles and/or wind, solar or other forms of alternative energy. Compliance with
changes in laws, regulations and obligations relating to climate change could result in increased costs of compliance for Pogo or costs
of consuming crude oil and natural gas for such products, and thereby reduce demand, which could reduce the profitability of Pogo.&#160;For
example, Pogo may be required to install new emission controls, acquire allowances or pay taxes related to their greenhouse gas emissions,
or otherwise incur costs to administer and manage a GHG emissions program. Additionally, Pogo could incur reputational risk tied to changing
customer or community perceptions of its, customers contribution to, or detraction from, the transition to a lower-carbon&#160;economy.
These changing perceptions could lower demand for oil and gas products, resulting in lower prices and lower revenues as consumers avoid
carbon-intensive&#160;industries, and could also pressure banks and investment managers to shift investments and reduce lending.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Separately, banks and other
financial institutions, including investors, may decide to adopt policies that restrict or prohibit investment in, or otherwise funding,
Pogo based on climate change-related&#160;concerns, which could affect its or Pogo&#8217;s access to capital for potential growth projects.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Approaches to climate change
and transition to a lower-carbon&#160;economy, including government regulation, company policies, and consumer behavior, are continuously
evolving. At this time, Pogo cannot predict how such approaches may develop or otherwise reasonably or reliably estimate their impact
on its or its operators&#8217; financial condition, results of operations and ability to compete. However, any long-term&#160;material
adverse effect on the oil and gas industry may adversely affect Pogo&#8217;s financial condition, results of operations and cash flows.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Additional restrictions on development activities
intended to protect certain species of wildlife may adversely affect Pogo&#8217;s ability to conduct development activities.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In the United&#160;States,
the Endangered Species Act (the &#8220;ESA&#8221;) restricts activities that may affect endangered or threatened species or their habitats.
Similar protections are offered to migratory birds under the Migratory Bird Treaty Act (the &#8220;MBTA&#8221;). To the extent species
that are listed under the ESA or similar state laws, or are protected under the MBTA, live in the areas where Pogo operates, Pogo&#8217;s
ability to conduct or expand operations could be limited, or Pogo could be forced to incur additional material costs. Moreover, Pogo&#8217;s
development drilling activities may be delayed, restricted or precluded in protected habitat areas or during certain seasons, such as
breeding and nesting seasons. For example, in June&#160;2021, the U.S.&#160;Fish&#160;&amp; Wildlife Service (the &#8220;FWS&#8221;) proposed
to list two distinct population sections (&#8220;DPS&#8221;) of the Lesser Prairie Chicken, including one in portions of the Permian Basin,
under the ESA (the &#8220;southern DPS&#8221;). On November&#160;25, 2022, the FWS finalized the proposed rule, listing the southern DPS
of the Lesser Prairie-Chicken&#160;as endangered and the northern DPS of the Lesser Prairie-Chicken&#160;as threatened.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Recently, there have also
been renewed calls to review protections currently in place for the dunes sagebrush lizard, whose habitat includes parts of the Permian
Basin, and to reconsider listing the species under the ESA.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, as a result of
one or more settlements approved by the FWS, the agency was required to make a determination on the listing of numerous other species
as endangered or threatened under the ESA by the end of the FWS&#8217; 2017 fiscal year. The FWS did not meet that deadline, but continues
to evaluate whether to take action with respect to those species. The designation of previously unidentified endangered or threatened
species could cause Pogo&#8217;s operations to become subject to operating restrictions or bans, and limit future development activity
in affected areas. The FWS and similar state agencies may designate critical or suitable habitat areas that they believe are necessary
for the survival of threatened or endangered species. Such a designation could materially restrict use of or access to federal, state
and private lands.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Risks Related to Our Financial and Debt Arrangements</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Restrictions in our current and future debt
agreements and credit facilities could limit our growth and our ability to engage in certain activities.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our current Term Loan (as
defined herein) contains certain customary representations and warranties and various covenants and restrictive provisions that limit
our ability to, among other things:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">incur or guarantee additional debt;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">enter into certain hedging contracts;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">A failure to comply with the
provisions of the Term Loan could result in an event of default, which could enable the Lender to declare, subject to the terms and conditions
of the Term Loan, any outstanding principal of that debt, together with accrued and unpaid interest, to be immediately due and payable.
If the payment of the debt is accelerated, cash flows from our operations may be insufficient to repay such debt in full. The Term Loan
contains events of default customary for transactions of this nature, including the occurrence of a change of control.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>If we are unable to comply with the restrictions
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acceleration of repayment.</i></b>&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If we are unable to comply
with the restrictions and covenants in the Term Loan Agreement, the Seller Note or any future debt agreement or if we default under the
terms of the Term Loan Agreement, the Seller Note or any future debt agreement, there could be an event of default. Our ability to comply
with these restrictions and covenants, including meeting any financial ratios and tests, may be affected by events beyond our control.
We cannot assure that we will be able to comply with these restrictions and covenants or meet such financial ratios and tests. In the
event of a default under the Term Loan Agreement, the Seller Note or any future debt agreement, the lenders could terminate accelerate
the loans and declare all amounts borrowed due and payable. If any of these events occur, our assets might not be sufficient to repay
in full all of our outstanding indebtedness and we may be unable to find alternative financing. Even if we could obtain alternative financing,
it might not be on terms that are favorable or acceptable to us. Additionally, we may not be able to amend the Term Loan Agreement, the
Seller Note or any future debt agreement or obtain needed waivers on satisfactory terms. There can be no assurance that, if needed to
avoid noncompliance with our debt agreements in the future, we will obtain the necessary waivers from the applicable lenders on satisfactory
terms or at all. As a result, there could be an event of default under such agreements, which could result in an acceleration of repayment.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Our debt levels may limit our flexibility
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our existing and any future
indebtedness could have important consequences to it, including:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->30<!-- Field: /Sequence --></p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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    <td style="width: 0.5in">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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    <td style="width: 0.5in">&#160;</td>
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</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our ability to service our
indebtedness will depend upon, among other things, our future financial and operating performance, which will be affected by prevailing
economic conditions and financial, business, regulatory and other factors, some of which are beyond its control. If our operating results
are not sufficient to service its current or future indebtedness, we will be forced to take actions such as reducing distributions, reducing
or delaying business activities, acquisitions, investments and/or capital expenditures, selling assets, restructuring or refinancing its
indebtedness, or seeking additional equity capital or bankruptcy protection. We may not be able to effect any of these remedies on satisfactory
terms or at all.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Our borrowings under the Term Loan Agreement
expose us to interest rate risk.&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our results of operations
are exposed to interest rate risk associated with borrowings under the Term Loan Agreement, which bears interest at rates based on the
Secured Overnight Financing Rate (&#8220;SOFR&#8221;) or an alternative floating interest rate benchmark. In response to inflation, the
U.S. Federal Reserve increased interest rates multiple times in 2022 and 2023 and signaled that additional interest rate increases should
be expected in 2024. Raising or lowering of interest rates by the U.S. Federal Reserve generally causes an increase or decrease, respectively,
in SOFR and other floating interest rate benchmarks. As such, if interest rates increase, so will our interest costs. If interest rates
continue to increase, it may have a material adverse effect on our results of operations and financial condition.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Risks Related to Our Common Stock and this Offering</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Our stock price may be volatile, which could result in substantial
losses to investors and litigation.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition to changes to
market prices based on our results of operations and the factors discussed elsewhere in this &#8220;Risk Factors&#8221; section, the market
price of and trading volume for our Class A Common Stock may change for a variety of other reasons, not necessarily related to our actual
operating performance. The capital markets have experienced extreme volatility that has often been unrelated to the operating performance
of particular companies. These broad market fluctuations may adversely affect the trading price of our Class A Common Stock. In addition,
the average daily trading volume of the securities of small companies can be very low, which may contribute to future volatility. Factors
that could cause the market price of our Class A Common Stock to fluctuate significantly include:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

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  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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    <td style="width: 0.5in">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Any of these factors, as well
as broader market and industry factors, may result in large and sudden changes in the trading volume of our Class A Common Stock and could
seriously harm the market price of our Class A Common Stock, regardless of our operating performance. This may prevent you from being
able to sell your shares at or above the price you paid for your shares of our Class A Common Stock, if at all. In addition, following
periods of volatility in the market price of a company&#8217;s securities, stockholders often institute securities class action litigation
against that company. Our involvement in any class action suit or other legal proceeding could divert our senior management&#8217;s attention
and could adversely affect our business, financial condition, results of operations and prospects.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>The sale or availability for sale of substantial
amounts of our Class A Common Stock could adversely affect the market price of our Class A Common Stock.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Sales of substantial amounts
of shares of our Class A Common Stock, or the perception that these sales could occur, could adversely affect the market price of our
Class A Common Stock and could impair our future ability to raise capital through common stock offerings.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We have never paid cash dividends on our
Class A Common Stock and do not anticipate paying any cash dividends on our Class A Common Stock.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have never paid cash dividends
and do not anticipate paying any cash dividends on our Class A Common Stock in the foreseeable future. We currently intend to retain any
earnings to finance our operations and growth. As a result, any short-term return on your investment will depend on the market price of
our Class A Common Stock, and only appreciation of the price of our Class A Common Stock, which may never occur, will provide a return
to stockholders. The decision whether to pay dividends will be made by our board of directors in light of conditions then existing, including,
but not limited to, factors such as our financial condition, results of operations, capital requirements, business conditions, and covenants
under any applicable contractual arrangements. Investors seeking cash dividends should not invest in our Class A Common Stock.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>If equity research analysts do not publish
research or reports about our business, or if they issue unfavorable commentary or downgrade our Class A Common Stock, the market price
of our Class A Common Stock will likely decline.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The trading market for our
Class A Common Stock will rely in part on the research and reports that equity research analysts, over whom we have no control, publish
about us and our business. We may never obtain research coverage by securities and industry analysts. If no securities or industry analysts
commence coverage of our company, the market price for our Class A Common Stock could decline. In the event we obtain securities or industry
analyst coverage, the market price of our Class A Common Stock could decline if one or more equity analysts downgrade our Class A Common
Stock or if those analysts issue unfavorable commentary, even if it is inaccurate, or cease publishing reports about us or our business.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>The NYSE American may delist our securities
from trading on its exchange, which could limit investors&#8217; ability to make transactions in our securities and subject us to additional
trading restrictions.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have listed our Class A
Common Stock and Public Warrants on the NYSE American. Although we have met the minimum initial listing standards set forth in the NYSE
American rules, we cannot assure you that our securities will be, or will continue to be, listed on the NYSE American in the future. In
order to continue listing our securities on the NYSE American, we must maintain certain financial, distribution and stock price levels.
Generally, we must maintain a minimum amount in stockholders&#8217; equity (generally $2,500,000) and a minimum number of holders of our
securities (generally 300 public holders).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On April 17, 2024, we received
a notice from the NYSE American that we were not in compliance with NYSE American listing standards as a result of our failure to timely
file our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 with the SEC. On May 3, 2024, we filed our Annual Report
on Form 10-K for the fiscal year ended December 31, 2023, and regained compliance with NYSE American rules. Although we believe that the
failure to timely file our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 was primarily as a result of the additional
time needed to account for the Purchase and we expect to file our required subsequent reports in a timely fashion, there can be no assurance
that we will be able to timely file required reports or meet other continued listing requirements in the future. However, in determining
whether to afford a company a cure period prior to commencing suspension or delisting procedures, the NYSE American analyzes all relevant
facts including any past history of late filings, and thus the late filing of our Annual Report on Form 10-K for the fiscal year ended
December 31, 2023 could be used as a factor by the NYSE American in any future decision to delist our securities from trading on its exchange.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If the NYSE American delists
our securities from trading on its exchange and we are not able to list our securities on another national securities exchange, we expect
our securities could be quoted on an over-the-counter&#160;market. If this were to occur, we could face significant material adverse consequences,
including:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
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    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">a limited availability of market quotations for our securities;</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -24pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
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    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">reduced liquidity for our securities;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -24pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">a determination that our Class A Common Stock is a &#8220;penny stock&#8221; which will require brokers trading in our Class A Common Stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -24pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">a limited amount of news and analyst coverage; and</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -24pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">a decreased ability to issue additional securities or obtain additional financing in the future.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>As a result of our prior status as a special
purpose acquisition company (&#8220;SPAC&#8221;), regulatory obligations may impact us differently than other publicly traded companies.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We became a publicly traded
company by completing the Purchase as a special purpose acquisition company (a &#8220;SPAC&#8221;). As a result of the Purchase, and the
transactions contemplated thereby, our regulatory obligations have, and may continue to impact us differently than other publicly traded
companies. For instance, the SEC and other regulatory agencies may issue additional guidance or apply further regulatory scrutiny to companies
like us that have completed a business combination with a SPAC. Managing this regulatory environment, which has and may continue to evolve,
could divert management&#8217;s attention from the operation of our business, negatively impact our ability to raise capital when needed,
or have an adverse effect on the price of our Class A Common Stock.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We may redeem your Public Warrants prior
to their exercise at a time that is disadvantageous to you, thereby making such warrants worthless.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We may redeem your Public
Warrants prior to their exercise at a time that is disadvantageous to you, thereby making such warrants worthless. We have the ability
to redeem outstanding Public Warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per
warrant, provided that the closing price of the shares of the Class A Common Stock equals or exceeds $18.00 per share (as adjusted for
share subdivisions, share capitalizations, reorganizations, recapitalizations and the like) for any 20&#160;trading days within a 30&#160;trading
day period ending on the third&#160;trading day prior to the date on which a notice of redemption is sent to the warrantholders. Please
note that the closing price of our Class A Common Stock has not exceeded $18.00 per share for any of the 30 trading days prior to the
date of this prospectus. We will not redeem the warrants as described above unless a registration statement under the Securities Act covering
the shares of the Class A Common Stock issuable upon exercise of such warrants is effective and a current prospectus relating to shares
of the Class A Common Stock is available throughout the 30-day&#160;redemption period. If and when the Public Warrants become redeemable
by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all
applicable state securities laws. Redemption of the outstanding Public Warrants could force you (i)&#160;to exercise your Public Warrants
and pay the exercise price therefor at a time when it may be disadvantageous for you to do so, (ii)&#160;to sell your Public Warrants
at the then-current&#160;market price when you might otherwise wish to hold your Public Warrants, or (iii)&#160;to accept the nominal
redemption price which, at the time the outstanding Public Warrants are called for redemption, is likely to be substantially less than
the market value of your Public Warrants.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The value received upon exercise
of the Public Warrants (1)&#160;may be less than the value the holders would have received if they had exercised their Public Warrants
at a later time where the underlying share price is higher and (2)&#160;may not compensate the holders for the value of the Public Warrants.
The fair value of the Public Warrants that may be retained by redeeming shareholders is $1.1 million&#160;based on recent trading prices,
and 8,625,000 Public Warrants held by public shareholders.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We may amend the terms of the Public Warrants
in a manner that may be adverse to holders of Public Warrants with the approval by the holders of at least 50% of the&#160;then-outstanding&#160;Public
Warrants. As a result, the exercise price of the warrants could be increased, the exercise period could be shortened and the number of
shares of our Class A Common Stock purchasable upon exercise of a warrant could be decreased, all without a holder&#8217;s approval.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our Public Warrants were issued
in registered form under a warrant agreement between Continental Stock Transfer&#160;&amp; Trust Company, as warrant agent, and us. The
warrant agreement provides that the terms of the warrants may be amended without the consent of any holder (i)&#160;to cure any ambiguity
or to correct any mistake, including to conform the provisions therein to the descriptions of the terms of the warrants, or to cure, correct
or supplement any defective provision, or (ii)&#160;to add or change any other provisions with respect to matters or questions arising
under the warrant agreement as the parties to the warrant agreement may deem necessary or desirable and that the parties deem to not adversely
affect the interests of the registered holders of the warrants. The warrant agreement requires the approval by the holders of at least
50% of the then-outstanding&#160;Public Warrants to make any change that adversely affects the interests of the registered holders of
Public Warrants. Accordingly, we may amend the terms of the Public Warrants in a manner adverse to a holder if holders of at least 50%
of the then-outstanding&#160;Public Warrants approve of such amendment. Although our ability to amend the terms of the Public Warrants
with the consent of at least 50% of the then-outstanding&#160;Public Warrants is unlimited, examples of such amendments could be amendments
to, among other things, increase the exercise price of the warrants, convert the warrants into cash or stock (at a ratio different than
initially provided), shorten the exercise period or decrease the number of shares of our Class A Common Stock purchasable upon exercise
of a warrant.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Purchases made pursuant to the Common Stock
Purchase Agreement will be made at a discount to the volume weighted average price of Class A Common Stock, which may result in negative
pressure on the stock price following the Closing of the Purchase.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On October 17, 2022, we entered
into a Common Stock Purchase Agreement (the &#8220;Common Stock Purchase Agreement) and a related registration rights agreement (the &#8220;White
Lion RRA&#8221;) with White Lion Capital, LLC (&#8220;White Lion&#8221;). Pursuant to the Common Stock Purchase Agreement, we have the
right, but not the obligation to require White Lion to purchase, from time to time, up to $150,000,000 in aggregate gross purchase price
of newly issued shares of Class A Common Stock, subject to certain limitations and conditions set forth in the Common Stock Purchase Agreement.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are obligated under the
Common Stock Purchase Agreement and the White Lion RRA to file a registration statement with the SEC to register the Class A Common Stock
under the Securities Act&#160;of&#160;1933, as amended, for the resale by White Lion of shares of Class A Common Stock that we may issue
to White Lion under the Common Stock Purchase Agreement. We filed a registration statement on Form S-1 (File No. 333-275378) that became
effective on August 9, 2024, which registered for resale up to 5,000,000 shares of Class A Common Stock that may be sold to White Lion
from time to time (the &#8220;Prior Registration Statement&#8221;). We have sold approximately $4.9 million in shares of our Class A Common
Stock pursuant to the Purchase Agreement, and we may receive proceeds of up to approximately $145.1 million remaining under the facility
from the sale of the shares of Class A Common Stock to White Lion under the Common Stock Purchase Agreement. White Lion has resold 4,350,000
shares registered on the Prior Registration Statement, with 650,000 shares remaining registered but unissued and not resold. Therefore,
we have filed the registration statement that includes this prospectus with the SEC to register under the Securities Act the resale by
White Lion of additional shares of Class A Common Stock that we may issue to White Lion under the Common Stock Purchase Agreement.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The purchase price to be paid
by White Lion for any such shares will equal 96% of the lowest daily volume-weighted&#160;average price of Class A Common Stock during
a period of two consecutive&#160;trading&#160;days following the applicable Notice Date.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Such purchases will dilute
our stockholders and could adversely affect the prevailing market price of our Class A Common Stock and impair our ability to raise capital
through future offerings of equity or equity-linked&#160;securities, although we intend to carefully control such purchases as to minimize
the impact. Accordingly, the adverse market and price pressures resulting from the purchase and registration of Class A Common Stock pursuant
to the Common Stock Purchase Agreement may continue for an extended period of time and continued negative pressure on the market price
of our Class A Common Stock could have a material adverse effect on our ability to raise additional equity capital.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>It is not possible to predict the actual
number of shares of Class A Common Stock, if any, we will sell under the Common Stock Purchase Agreement to White Lion or the actual gross
proceeds resulting from those sales.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We generally have the right
to control the timing and amount of any sales of the Class A Common Stock to White under the Common Stock Purchase Agreement. Sales of
Class A Common Stock, if any, to White Lion under the Common Stock Purchase Agreement will depend upon market conditions and other factors
to be determined by us. We may ultimately decide to sell to White Lion all, some or none of the Class A Common Stock that may be available
for us to sell to White Lion pursuant to the Common Stock Purchase Agreement.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Because the purchase price
per share of Class A Common Stock to be paid by White Lion will fluctuate based on the market prices of the Class A Common Stock at the
time we elect to sell Class A Common Stock to White Lion pursuant to the Common Stock Purchase Agreement, if any, it is not possible for
us to predict, as of the date of this prospectus and prior to any such sales, the number of shares of Class A Common Stock that we will
sell to White Lion under the Common Stock Purchase Agreement, the purchase price per share that White Lion will pay for Class A Common
Stock purchased from us under the Common Stock Purchase Agreement, or the aggregate gross proceeds that we will receive from those purchases
by White Lion under the Common Stock Purchase Agreement.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The number of shares of Class
A Common Stock ultimately offered for sale by White Lion is dependent upon the number of shares of Class A Common Stock, if any, we ultimately
elect to sell to White Lion under the Common Stock Purchase Agreement. However, even if we elect to sell Class A Common Stock to White
Lion pursuant to the Common Stock Purchase Agreement, White Lion may resell all, some or none of such shares at any time or from time
to time in its sole discretion and at different prices.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Because the purchase price
per share to be paid by White Lion for the shares of Class A Common Stock that we may elect to sell to White Lion under the Common Stock
Purchase Agreement, if any, will fluctuate based on the market prices of our Class A Common Stock for each purchase made pursuant to the
Common Stock, if any, it is not possible for us to predict, as of the date of this prospectus and prior to any such sales, the number
of shares of Class A Common Stock that we will sell to White Lion under the Common Stock Purchase Agreement, the purchase price per share
that While Lion will pay for shares purchased from us under the Common Stock Purchase Agreement, or the aggregate gross proceeds that
we will receive from those purchases by White Lion under the Purchase Agreement, if any.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Moreover, although the Common
Stock Purchase Agreement provides that we may sell up to an aggregate of $150,000,000 of our Class A Common Stock to White Lion (of which
proceeds of approximately $4.9 million from the issuance and sale of 4,350,000 shares have been previously received by the Company, with
approximately $145.1 million in available proceeds remaining under the Common Stock Purchase Agreement), we initially registered only
5,000,000 shares of our Class A Common Stock in the Prior Registration Statement and we are registering only an additional 5,000,000 ELOC
Shares hereby. If we elect to sell to White Lion all of the ELOC Shares registered for resale (including the shares registered under the
Prior Registration Statement), depending on the market prices of our Class A Common Stock for each purchase made pursuant to the Common
Stock Purchase Agreement, the actual gross proceeds from the sale of the shares may be substantially less than the $150,000,000 total
commitment available to us under the Common Stock Purchase Agreement. If it becomes necessary for us to issue and sell to White Lion under
the Common Stock Purchase Agreement more shares than the ELOC Shares being registered for resale under this prospectus in order to receive
aggregate gross proceeds equal to $150,000,000 under the Common Stock Purchase Agreement, we must file with the SEC additional registration
statements to register under the Securities Act the resale by White Lion of any such additional shares of our Class A Common Stock over
the ELOC Shares registered in this Registration Statement that we wish to sell from time to time under the Common Stock Purchase Agreement,
which the SEC must declare effective, in each case before we may elect to sell any additional shares of our Class A Common Stock to White
Lion under the Common Stock Purchase Agreement.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Any issuance and sale by us
under the Common Stock Purchase Agreement of a substantial amount of shares of Class A Common Stock in addition to the ELOC Shares being
registered for resale by White Lion under this prospectus could cause additional substantial dilution to our stockholders. The number
of shares of our Class A Common Stock ultimately offered for sale by White Lion is dependent upon the number of shares of Class A Common
Stock, if any, we ultimately sell to White Lion under the Common Stock Purchase Agreement.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>The sale and issuance of Class A Common
Stock to White Lion will cause dilution to our existing securityholders, and the resale of the Class A Common Stock acquired by White
Lion, or the perception that such resales may occur, could cause the price of our Class A Common Stock to decrease.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The purchase price per share
of Class A Common Stock to be paid by White Lion for additional shares of Class A Common Stock that we may elect to sell to White Lion
under the Common Stock Purchase Agreement, if any, will fluctuate based on the market prices of our Class A Common Stock at the time we
elect to sell Class A Common Stock to White Lion pursuant to the Common Stock Purchase Agreement. Depending on market liquidity at the
time, resales of such Class A Common Stock by White Lion may cause the trading price of our Class A Common Stock to decrease.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If and when we elect to sell
additional shares of Class A Common Stock to White Lion registered hereunder, sales of newly issued Class A Common Stock by us to White
Lion could result in substantial dilution to the interests of existing holders of our Class A Common Stock. Additionally, the sale of
a substantial number of Class A Common Stock to White Lion, or the anticipation of such sales, could make it more difficult for us to
sell equity or equity-related&#160;securities in the future at a time and at a price that we might otherwise wish to effect sales.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We expect to grant equity
awards to employees and directors under our equity incentive plans. We may also raise capital through equity financings in the future.
As part of our business strategy, we may make or receive investments in companies, solutions or technologies and issue equity securities
to pay for any such acquisition or investment. Any such issuances of additional share capital may cause shareholders to experience significant
dilution of their ownership interests and the per share value of our Class A Common Stock to decline.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Investors who buy shares at different times
will likely pay different prices.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the Common Stock
Purchase Agreement, we will have discretion, subject to market demand, to vary the timing, prices, and numbers of shares sold to White
Lion. If and when we do elect to sell additional shares of our Class A Common Stock to White Lion pursuant to the Common Stock Purchase
Agreement, after White Lion has acquired such shares, White Lion may resell all, some or none of such shares at any time or from time
to time in its discretion and at different prices. As a result, investors who purchase shares from White Lion in this offering at different
times will likely pay different prices for those shares, and so may experience different levels of dilution and in some cases substantial
dilution and different outcomes in their investment results. Investors may experience a decline in the value of the shares they purchase
from White Lion in this offering as a result of future sales made by us to White Lion at prices lower than the prices such investors paid
for their shares in this offering.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Management will have broad discretion as
to the use of the proceeds from the sale of shares to White Lion, and uses may not improve our financial condition or market value.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Because we have not designated
the amount of net proceeds from the sale of shares of our Class A Common Stock to be used for any particular purpose, our management will
have broad discretion as to the application of such net proceeds and could use them for purposes other than those contemplated hereby.
Our management may use the net proceeds for corporate purposes that may not improve our financial condition or market value.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>The JOBS Act permits &#8220;emerging growth
companies&#8221; like us to take advantage of certain exemptions from various reporting requirements applicable to other public companies
that are not emerging growth companies.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We qualify as an &#8220;emerging
growth company&#8221; as defined in Section&#160;2(a)(19)&#160;of the Securities Act, as modified by the JOBS Act. As such, we take advantage
of certain exemptions from various reporting requirements applicable to other public companies that are not emerging growth companies,
including (a)&#160;the exemption from the auditor attestation requirements with respect to internal control over financial reporting under
Section&#160;404 of the Sarbanes-Oxley&#160;Act, (b)&#160;the exemptions from say-on-pay, say-on-frequency&#160;and say-on-golden&#160;parachute
voting requirements and (c)&#160;reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements.
As a result, our stockholders may not have access to certain information they deem important. We will remain an emerging growth company
until the earliest of (a)&#160;the last&#160;day of the fiscal year (i)&#160;following February&#160;10, 2027, the fifth anniversary of
our IPO, (ii)&#160;in which we have total annual gross revenue of at least $1.235&#160;billion (as adjusted for inflation pursuant to
SEC rules from time to time) or (iii)&#160;in which we are deemed to be a large accelerated filer, which means the market value of our
Class A Common Stock that is held by non-affiliates&#160;exceeds $700&#160;million as of the last business&#160;day of our prior second
fiscal quarter, and (b)&#160;the date on which we have issued more than $1.0&#160;billion in non-convertible&#160;debt during the prior
three year period.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, Section&#160;107
of the JOBS Act provides that an emerging growth company can take advantage of the exemption from complying with new or revised accounting
standards provided in Section&#160;7(a)(2)(B)&#160;of the Securities Act as long as we are an emerging growth company. An emerging growth
company can therefore delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.
The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply
to non-emerging&#160;growth companies, but any such election to opt out is irrevocable. We have elected to irrevocably opt out of such
extended transition period, which means that when a standard is issued or revised and it has different application dates for public or
private companies, we will adopt the new or revised standard at the time public companies adopt the new or revised standard. This may
make comparison of our financial statements with another emerging growth company that has not opted out of using the extended transition
period difficult or impossible because of the potential differences in accounting standards used.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We cannot predict if investors
will find our Class A Common Stock less attractive because we will rely on these exemptions. If some investors find our Class A Common
Stock less attractive as a result, there may be less active trading market for our Class A Common Stock and our stock price may be more
volatile.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>The Second A&amp;R Charter designates state
courts within the State of Delaware as the exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders,
which could limit stockholders&#8217; ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees
or agents.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Second A&amp;R Charter
provides that, unless we consent in writing to the selection of an alternative forum, (a)&#160;the Court of Chancery of the State of Delaware
shall, to the fullest extent permitted by law, be the sole and exclusive forum for (i)&#160;any derivative action or proceeding brought
on behalf of the company, (ii)&#160;any action asserting a claim of breach of a fiduciary duty owed by, or other wrongdoing by, any current
or former director, officer, employee or agent of the company to us or our stockholders, or a claim of aiding and abetting any such breach
of fiduciary duty, (iii)&#160;any action asserting a claim against us or any of our directors, officers, employees or agents arising pursuant
to any provision of the DGCL, the Second A&amp;R Charter (as may be amended, restated, modified, supplemented or waived from time to time),
(iv)&#160;any action to interpret, apply, enforce or determine the validity of the Second A&amp;R Charter (as may be amended, restated,
modified, supplemented or waived from time to time), (v)&#160;any action asserting a claim against us or any of our directors, officers,
employees or agents that is governed by the internal affairs doctrine or (vi)&#160;any action asserting an &#8220;internal corporate claim&#8221;
as that term is defined in Section&#160;115 of the DGCL.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, the Second A&amp;R
Charter provides that, unless we consent in writing to the selection of an alternative forum, the federal district courts of the United&#160;States
of America shall, to the fullest extent permitted by law, be the sole and exclusive forum for the resolution of any complaint asserting
a cause of action arising under the Securities Act and the rules and regulations promulgated thereunder. Notwithstanding the foregoing,
the Second A&amp;R Charter provides that the exclusive forum provision will not apply to claims seeking to enforce any liability or duty
created by the Exchange&#160;Act or any other claim for which the U.S.&#160;federal courts have exclusive jurisdiction.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">This choice of forum provision
may limit a stockholder&#8217;s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our
directors, officers, other employees or stockholders, which may discourage lawsuits with respect to such claims, although our stockholders
will not be deemed to have waived our compliance with federal securities laws and the rules and regulations thereunder. Alternatively,
if a court were to find the choice of forum provision contained in our amended and restated bylaws to be inapplicable or unenforceable
in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business,
operating results and financial condition.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>The Second A&amp;R Charter contains a waiver
of the corporate opportunities doctrine for our directors and officers, and therefore such persons have no obligations to make opportunities
available to us.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The &#8220;corporate opportunities&#8221;
doctrine provides that directors and officers of a corporation, as part of their duty of loyalty to the corporation and its shareholders,
generally have a fiduciary duty to disclose opportunities to the corporation that are related to its business and are prohibited from
pursuing those opportunities unless the corporation determines that it is not going to pursue them. Our amended and restated certificate
of incorporation waives the corporate opportunities doctrine. It states that, to the extent allowed by law, the doctrine of corporate
opportunity, or any other analogous doctrine, shall not apply with respect to us or any of our officers or directors or any of their respective
affiliates, in circumstances where the application of any such doctrine would conflict with any fiduciary duties or contractual obligations
they may have as of the date of the amended and restated certificate of incorporation or in the future, and we renounce any expectancy
that any of pir directors or officers will offer any such corporate opportunity of which he or she may become aware to us, except, the
doctrine of corporate opportunity shall apply with respect to any of our directors or officers with respect to a corporate opportunity
that was offered to such person solely in his or her capacity as a director or officer of the company and (i)&#160;such opportunity is
one that we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue and (ii)&#160;the
director or officer is permitted to refer that opportunity to us without violating any legal obligation.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our directors and officers
or their respective affiliates may pursue acquisition opportunities that may be complementary to our business and, as a result of the
waiver described above, those acquisition opportunities may not be available to us. In addition, our directors and officers or their respective
affiliates may have an interest in pursuing acquisitions, divestitures and other transactions that, in its judgment, could enhance its
investment, even though such transactions might involve risks to you.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We are a holding company with no operations
of our own, and we depend on our subsidiaries for cash to fund all of our operations, taxes and other expenses and any dividends that
we may pay.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our operations are conducted
entirely through our subsidiaries. Our ability to generate cash to meet our debt and other obligations, to cover all applicable taxes
payable and to declare and pay any dividends on our Class A Common Stock is dependent on the earnings and the receipt of funds through
distributions from our subsidiaries. Our subsidiaries&#8217; respective abilities to generate adequate cash depends on a number of factors,
including development of reserves, successful acquisitions of complementary properties, advantageous drilling conditions, natural gas,
oil prices, compliance with all applicable laws and regulations and other factors.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Because the currently outstanding shares
of Class A Common Stock that are being registered in this prospectus represent a substantial percentage of our outstanding Class A Common
Stock, the sale of such securities could cause the market price of our Class A Common Stock to decline significantly.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">This prospectus relates to
the offer and sale from time to time by the Selling Securityholders of an aggregate of up to 79,050 shares of our currently outstanding
Class A Common Stock, consisting of the Exchange Shares and the Services Shares, and the offer and sale from time to time by White Lion
of up to 5,000,000 additional shares of Class A Common Stock that we may sell to White Lion, from time to time at our sole discretion,
pursuant to the Common Stock Purchase Agreement.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The number of shares of Class
A Common Stock that the Selling Securityholders can sell into the public markets pursuant to this prospectus represents a significant
amount of our outstanding shares of Class A Common Stock. As of January 15, 2025, there were 12,895,544 shares of Class A Common Stock
outstanding. If all shares being registered hereby were sold, it would comprise approximately 28.4% of our total shares of Class A Common
Stock outstanding. If we assume that all of the White Lion ELOC Shares registered in the Prior Registration Statement have been issued
and resold pursuant to the Prior Registration Statement, the Company would have 13,545,544 shares of Class A Common Stock outstanding,
and if all shares being registered hereunder were sold, it would comprise approximately 27.4% of our total shares of Class A Common Stock.
Given the substantial number of shares of Class A Common Stock registered pursuant to this prospectus, the sale of Class A Common Stock
by the Selling Securityholders, or the perception in the market that the Selling Securityholders of a large number of shares of Class
A Common Stock intend to sell Class A Common Stock, could increase the volatility of the market price of our Class A Common Stock or result
in a significant decline in the public trading price of our Class A Common Stock.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, even though the
current market price of our Class A Common Stock is significantly below the price at the time of our initial public offering, certain
Selling Securityholders have an incentive to sell because they have purchased their Class A Common Stock at prices lower than the current
trading price of the Class A Common Stock, and they may profit even under circumstances in which our public stockholders or certain other
Selling Securityholders would experience losses in connection with their investment. The securities being registered for resale were issued
to, purchased by or will be purchased by the Selling Securityholders for the following consideration: (i) a purchase price yet to be determined
for the ELOC Shares (as described herein), (ii) a purchase of price of $1.00 per share of Class A Common Stock for the Exchange Shares,
and (iii) a purchase of price of $0.82 per share of Class A Common Stock for the Service Shares. If the Selling Securityholders were to
sell the shares of Class A Common Stock at a price of $1.09 per share (the last reported sale price of our Class A Common Stock on January
15, 2025), they would recognize a profit or loss as follows: (i) an unknown profit or loss for the ELOC Shares, (ii) a profit of approximately
$0.09 per share for the Exchange Shares, and (iii) a gain of approximately $0.27 per share for the Service Shares.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Investors who purchase Class
A Common Stock on the NYSE American following the Purchase are unlikely to experience a similar rate of return on the Class A Common Stock
they purchase due to differences in the purchase prices and the current trading price referenced above. In addition, sales by the Selling
Securityholders may cause the trading prices of our securities to experience a decline. As a result, the Selling Securityholders may effect
sales of Class A Common Stock at prices significantly below the current market price, which could cause market prices to decline further.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><div><a id="k_007"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Some of the statements under
&#8220;Prospectus Summary,&#8221; &#8220;Risk Factors,&#8221; &#8220;Management&#8217;s Discussion and Analysis of Financial Condition
and Results of Operations,&#8221; &#8220;Business,&#8221; and elsewhere in this prospectus constitute forward-looking statements. These
statements involve risks known to us, significant uncertainties, and other factors which may cause our actual results, levels of activity,
performance, or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed
or implied by those forward-looking statements. All statements, other than statements of present or historical fact, included in this
prospectus concerning our strategy, future operations, financial condition, estimated revenues and losses, projected costs, prospects,
plans and objectives of management are forward-looking statements. Words such as &#8220;could,&#8221; &#8220;believe,&#8221; &#8220;should,&#8221;
&#8220;will,&#8221; &#8220;may,&#8221; &#8220;believe,&#8221; &#8220;anticipate,&#8221; &#8220;intend,&#8221; &#8220;estimate,&#8221;
&#8220;expect,&#8221; &#8220;project,&#8221; the negative of such terms and other similar expressions are used to identify forward-looking
statements, although not all forward-looking statements contain such identifying words. Without limiting the generality of the foregoing,
forward-looking statements contained in this prospectus include statements regarding our financial position, business strategy and other
plans and objectives for future operations or transactions, and expectations and intentions regarding outstanding litigation,. These forward-looking
statements are based on current expectations and assumptions of management about future events and are based on currently available information
as to the outcome and timing of future events. Such forward-looking statements can be affected by assumptions used or by known or unknown
risks or uncertainties, most of which are difficult to predict and many of which are beyond our control, incident to the development,
production, gathering and sale of oil and natural gas. Consequently, no forward-looking statements can be guaranteed.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">A forward-looking statement
may include a statement of the assumptions or bases underlying the forward-looking statement. We believe that it has chosen these assumptions
or bases in good faith and that they are reasonable. However, when considering these forward-looking statements, you should keep in mind
the risk factors and other cautionary statements described under the heading &#8220;Risk Factors&#8221;. Actual results may vary materially.
You are cautioned not to place undue reliance on any forward-looking statements. You should also understand that it is not possible to
predict or identify all such factors and should not consider the following list to be a complete statement of all potential risks and
uncertainties. Factors that could cause actual results to differ materially from the results contemplated by such forward-looking statements
include:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -24pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in; text-align: justify">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the financial and business performance of EON;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in; text-align: justify">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the ability to maintain the listing of the Class A Common Stock and the public warrants on EON American, and the potential liquidity and trading of such securities;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in; text-align: justify">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the diversion of management in connection with the Purchase and EON&#8217;s ability to successfully integrate Pogo&#8217;s operations and achieve or realize fully or at all the anticipated benefits, savings or growth of the Transactions;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in; text-align: justify">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the impact of the announcement of the Purchase on relationships with third parties, including commercial counterparties, employees and competitors, and risks associated with the loss and ongoing replacement of key personnel;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in; text-align: justify">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">EON&#8217;s abilities to execute its business strategies;</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in; text-align: justify">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">changes in general economic conditions, including the material and adverse negative consequences of the COVID-19 pandemic and its unfolding impact on the global and national economy and/or as a result of the armed conflict in Ukraine and associated economic sanctions on Russia;</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in; text-align: justify">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in; text-align: justify">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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    <td style="width: 0.5in; text-align: justify">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in; text-align: justify">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -24pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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    <td style="width: 0.5in; text-align: justify">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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    <td style="width: 0.5in; text-align: justify">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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    <td style="width: 0.5in; text-align: justify">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in; text-align: justify">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in; text-align: justify">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in; text-align: justify">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">title defects in the properties in which EON invests;</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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    <td style="width: 0.5in">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
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    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">future operating results;</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
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    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the impact of reduced drilling activity in our focus areas and uncertainty in whether development projects will be pursued;</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
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    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">operating hazards faced by our operators;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
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    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">technological advancements;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
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    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">weather conditions, natural disasters and other matters beyond our control; and</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">certain risks and uncertainties discussed elsewhere in this prospectus, including those under the heading &#8220;Risk Factors&#8221; and other filings that have been made or will be made with the SEC.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We caution that the foregoing
list of factors is not exclusive. We may be subject to currently unforeseen risks that may have a materially adverse effect on it. All
subsequent written and oral forward-looking statements concerning us other matters attributable to us, or any person acting on our behalf,
are expressly qualified in their entirety by the cautionary statements above. The forward-looking statements speak only as of the date
made and, other than as required by law, we do not undertake any obligation to update publicly or revise any of these forward-looking
statements.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Although we believe that the
exceptions reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance
or achievements.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><div><a id="k_008"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>WHITE LION CAPITAL COMMITTED EQUITY FINANCING</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>General</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On October 17, 2022, we entered
into a common stock purchase agreement (as amended the &#8220;Common Stock Purchase Agreement&#8221;) and a related registration rights
agreement (the &#8220;White Lion RRA&#8221;) with White Lion Capital, LLC, a Nevada limited liability company (&#8220;White Lion&#8221;).
On March 7, 2024, we entered into an Amendment No. 1 to the Common Stock Purchase Agreement. On June 17, 2024, the Company entered into
an Amendment No. 2 to Common Stock Purchase Agreement (the &#8220;2nd Amendment&#8221;) with White Lion. Pursuant to the 2nd Amendment,
the Company and White Lion agreed to amend the process of a Rapid Purchase, whereby the parties will close on the Rapid Purchase on the
trading day the notice of the applicable Rapid Purchase is given. The 2nd Amendment, among other things, also removed the maximum number
of shares required to be purchased upon notice of a Rapid Purchase, added a limit of 100,000 shares of Common Stock per individual request,
and revised the purchase price of a Rapid Purchase to equal the lowest traded price of Common Stock during the one hour following White
Lion&#8217;s acceptance of the Rapid Purchase for each request. In addition, White Lion agreed that, on any single business day, it shall
not publicly resell an aggregate amount of Commitment Shares in an amount that exceeds 7% of the daily trading volume of the Common Stock
for such business day, excluding any trades before or after regular trading hours and any block trades. Pursuant to the Common Stock Purchase
Agreement, we have the right, but not the obligation to require White Lion to purchase, from time to time, up to $150,000,000 in aggregate
gross purchase price of newly issued shares of our Class A Common Stock, subject to certain limitations and conditions set forth in the
Common Stock Purchase Agreement. Capitalized terms used but not otherwise defined herein shall have the meaning given to such terms by
the Common Stock Purchase Agreement.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are obligated under the
Common Stock Purchase Agreement and the White Lion RRA to file a registration statement with the SEC to register the common stock under
the Securities Act of 1933, as amended, for the resale by White Lion of shares of Class A Common Stock we may issue to White Lion under
the Common Stock Purchase Agreement. In accordance with our obligations under the White Lion RRA, we filed the Prior Registration Statement,
pursuant to which we have sold 4,350,000 shares of our Class A Common Stock pursuant to the Purchase Agreement for proceeds of approximately
$4.9 million, and we may receive available proceeds of up to approximately $145.1 remaining under the facility from the sale of the shares
of Class A Common Stock to White Lion under the Common Stock Purchase Agreement. We have sold 4,350,000 on the Prior Registration Statement
with 650,000 shares remaining available for issuance and resale by White Lion. It is the intent of the parties for White Lion to sell
all remaining shares registered on the Prior Registration Statement before reselling any shares issuable under the Common Stock Purchase
Agreement being registered hereunder. Therefore, we have filed the registration statement that includes this prospectus with the SEC to
register under the Securities Act the resale by White Lion of additional shares of Class A Common Stock that we may issue to White Lion
under the Common Stock Purchase Agreement.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Subject to the satisfaction
of certain customary conditions our right to sell shares to White Lion will extend until December 31, 2026. During such term, subject
to the terms and conditions of the Common Stock Purchase Agreement, we may notify White Lion when we exercise our right to sell shares
(the effective date of such notice, a &#8220;Notice Date&#8221;).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, we may, from
time to time while a purchase notice is active, issue a Rapid Purchase Notice to White Lion for the purchase of shares (not to exceed
100,000 shares per individual request) at a purchase price equal to the lowest traded price of Common Stock during the one hour following
White Lion&#8217;s acceptance of the Rapid Purchase for each request, and the parties will close on the Rapid Purchase on the trading
day the notice of the applicable Rapid Purchase is given. Furthermore, White Lion agreed that, on any single Business Day, it shall not
publicly resell an aggregate amount of Commitment Shares in an amount that exceeds 7% of the daily trading volume of our Class A Common
Stock for such Business Day, excluding any trades before or after regular trading hours and any block trades.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">During such term we will control
the timing and amount of any sales of our Class A Common Stock to White Lion. Actual sales of shares of our Class A Common Stock to White
Lion under the Common Stock Purchase Agreement will depend on a variety of factors to be determined by us from time to time, including,
among others, market conditions, the trading price of the Class A Common Stock and determinations by us as to the appropriate sources
of funding for our company and our operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The number of shares sold
pursuant to any such purchase notice may not exceed (i) the lower of (a) $2,000,000 and (b) the dollar amount equal to the product of
(1) the Effective Daily Trading Volume (2) the closing price of common stock on the Effective Date (3) 400% and (4) 30%, divided by the
closing price of common stock on NYSE American preceding the Notice Date and (ii) a number of shares of common stock equal to the Average
Daily Trading Volume multiplied by the Percentage Limit. The purchase price to be paid by White Lion for any such shares will equal 96%
of the lowest daily volume-weighted average price of common stock during a period of two consecutive trading days following the applicable
Notice Date.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The net proceeds from sales,
if any, under the Common Stock Purchase Agreement, will depend on the frequency and prices at which we sell shares of Class A Common Stock
to White Lion. To the extent we sells share under the Common Stock Purchase Agreement, we currently plan to use any proceeds therefrom
for costs of this transaction, for working capital, strategic and other general corporate purposes.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have the right to terminate
the Common Stock Purchase Agreement at any time after Commencement Date, at no cost or penalty, upon three trading days&#8217; prior written
notice. Additionally, White Lion will have the right to terminate the Common Stock Purchase Agreement upon three days&#8217; prior written
notice to us if (i) there is a Fundamental Transaction, (ii) we are in breach or default in any material respect of the White Lion RRA,
(iii) there is a lapse of the effectiveness, or unavailability of, the registration statement that includes this prospectus for a period
of 45 consecutive trading days or for more than an aggregate of 90 trading days in any 365-day period, (iv) the suspension of trading
of the common stock for a period of five consecutive trading days, (v) our material breach of the Common Stock Purchase Agreement, which
breach is not cured within the applicable cure period or (vi) a Material Adverse Effect has occurred and is continuing. No termination
of the Common Stock Purchase Agreement will affect the registration rights provisions contained in the White Lion RRA.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In consideration for White
Lion&#8217;s execution and delivery of the Common Stock Purchase Agreement, we issued to White Lion 440,000 shares of Class A Common Stock
(the &#8220;Commitment Shares&#8221;).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Common Stock Purchase
Agreement does not include any of the following: (i) limitations on our use of amounts we receive as the purchase price for shares of
Class A Common Stock sold to White Lion; (ii) financial or business covenants; (iii) restrictions on future financings (other than restrictions
on its ability to enter into other equity line of credit transactions or transactions that are similar thereto); (iv) rights of first
refusal; or (v) participation rights or penalties.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As of January 15, 2025, there
were 12,895,544 shares of our Class A Common Stock outstanding. Although the Common Stock Purchase Agreement provides that we may sell
up to an aggregate of $150,000,000 of shares of our Class A Common Stock to White Lion, only 5,000,000 shares of our Class A Common Stock
are being registered for resale by White Lion under this prospectus. Depending on the market prices of our Class A Common Stock at the
time we elect to issue and sell shares of our Class A Common Stock White Lion under the Common Stock Purchase Agreement, we may need to
register for resale under the Securities Act additional shares of our Class A Common Stock in order to receive aggregate gross proceeds
equal to the $150,000,000 total commitment available to us under the Common Stock Purchase Agreement. If all of such 5,000,000 shares
of our Class A Common Stock offered hereby were issued and outstanding as of January 15, 2025, such shares would represent approximately
27.9% of the total number of outstanding shares of Class A Common Stock, and approximately 32.1% of the total number of outstanding shares
of Class A Common Stock held by non-affiliates upon effectiveness of the registration statement of which this prospectus is made a part
(assuming all of the 5,000,000 shares are included in the number of outstanding shares of Class A Common Stock held by non-affiliates).
In addition, if all of such 5,000,000 shares of our Class A Common Stock offered hereby were issued and outstanding as of January 15,
2025, such shares would represent approximately 27.2% of the total number of shares entitled to vote at a meeting of stockholders, and
approximately 31.1% of the total number of shares entitled to vote at a meeting of stockholders held by non-affiliates upon effectiveness
of the registration statement of which this prospectus is made a part (assuming all of the 5,000,000 shares are included in the number
of shares entitled to vote at a meeting of stockholders held by non-affiliates). If we elect to issue and sell to White Lion under the
Common Stock Purchase Agreement more than the 5,000,000 shares of our Class A Common Stock being registered for resale by White Lion under
this prospectus, which we have the right, but not the obligation, to do, we must first register for resale under the Securities Act any
such additional shares of our Class A Common Stock, which could cause additional substantial dilution to our shareholders. The number
of shares of our Class A Common Stock ultimately offered for sale by White Lion is dependent upon the number of shares purchased by White
Lion under the Common Stock Purchase Agreement.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Issuances of our Class A Common
Stock to White Lion under the Purchase Agreement will not affect the rights or privileges of our existing shareholders, except that the
economic and voting interests of each of our existing shareholders will be diluted as a result of any such issuance. Although the number
of shares of our Class A Common Stock that our existing shareholders own will not decrease, the shares of our Class A Common Stock owned
by our existing shareholders will represent a smaller percentage of our total outstanding shares of our Class A Common Stock after any
such issuance of shares of our Class A Common Stock to White Lion under the Common Stock Purchase Agreement. There are substantial risks
to our shareholders as a result of the sale and issuance of Class A Common Stock to White Lion under the Purchase Agreement. See the section
entitled &#8220;<i>Risk Factors</i>.&#8221;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>No Short-Selling or Hedging by White Lion </b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">White Lion has represented
to us that at no time prior to the date of the Common Stock Purchase Agreement has White Lion or its agents, representatives or affiliates
engaged in or effected, in any manner whatsoever, directly or indirectly, any short sale (as such term is defined in Rule&#160;200 of
Regulation&#160;SHO of the Exchange&#160;Act) of our Class A Common Stock or any hedging transaction, which establishes a net short position
with respect to our Class A Common Stock. White Lion has agreed that during the term of the Common Stock Purchase Agreement, neither White
Lion, nor any of its agents, representatives or affiliates will enter into or effect, directly or indirectly, any of the foregoing transactions.</p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Effect of Performance of the Common Stock Purchase
Agreement on our Stockholders </b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">All shares registered in this
offering that may be issued or sold by us to White Lion under the Common Stock Purchase Agreement are expected to be freely tradable.
The resale by White Lion of a significant number of shares registered in this offering at any given time, or the perception that these
sales may occur, could cause the market price of our Class A Common Stock to decline and to be highly volatile. Sales of our Class A Common
Stock to White Lion, if any, will depend upon market conditions and other factors to be determined by us. We may ultimately decide to
sell to White Lion all, some or none of the additional shares of our Class A Common Stock that may be available for us to sell pursuant
to the Common Stock Purchase Agreement. If and when we do sell shares to White Lion, after White Lion has acquired the shares, White Lion
may resell all, some or none of those shares of Class A Common Stock at any time or from time to time in its discretion. Therefore, sales
to White Lion by us under the Common Stock Purchase Agreement may result in substantial dilution to the interests of other holders of
our Class A Common Stock. In addition, if we sell a substantial number of shares to White Lion under the Common Stock Purchase Agreement,
or if investors expect that we will do so, the actual sales of shares or the mere existence of our arrangement with White Lion may make
it more difficult for us to sell equity or equity-related securities in the future at a time and at a price that we might otherwise wish
to effect such sales. However, we have the right to control the timing and amount of any additional sales of Class A Common Stock to White
Lion and the Common Stock Purchase Agreement may be terminated by us at any time at our discretion without any cost to us, subject to
certain conditions.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the terms of the
Common Stock Purchase Agreement, we have the right, but not the obligation, to direct White Lion to purchase up to $150,000,000 of our
Class A Common Stock, subject to certain limitations. If we elect to issue and sell to White Lion under the Common Stock Purchase Agreement
more than the 5,000,000 shares of our Class A Common Stock being registered for resale by White Lion under this prospectus, which we have
the right, but not the obligation, to do, we must first register for resale under the Securities Act any such additional shares of our
Class A Common Stock, which could cause additional substantial dilution to our shareholders. The number of shares of our Class A Common
Stock ultimately offered for sale by White Lion is dependent upon the number of shares purchased by White Lion under the Common Stock
Purchase Agreement.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following table sets forth
the amount of gross proceeds we would receive from White Lion from our sale of shares of Class A Common Stock to White Lion under the
Common Stock Purchase Agreement at varying purchase prices:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">Assumed Average Purchase Price Per
    Share</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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ELOC<br/>
Shares to<br/> be Issued if Full<br/> Purchase<sup>(1)</sup></b></span></td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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Issuance of<br/>
the ELOC<br/>
Shares<sup>(2)</sup></b></span></td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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Issuance of<br/>
the ELOC<br/>
Shares and<br/>
the shares<br/>
registered<br/>
under the<br/>
Prior<br/>
Registration<br/>
Statement<sup>(3)</sup></b></span></td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Gross Proceeds from<br/> the Sale of<br/>
the ELOC<br/>
Shares to<br/> White Lion</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 1%; text-align: left">$</td>
    <td style="width: 51%; text-align: left">0.50</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">5,000,000</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">27.94</td><td style="width: 1%; text-align: left">%</td><td style="width: 1%">&#160;</td>
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    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">2,500,000</td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">$</td>
    <td style="text-align: left">0.75</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">5,000,000</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">27.94</td><td style="text-align: left">%</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">26.96</td><td style="text-align: left">%</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">3,750,000</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">$</td>
    <td style="text-align: left">1.00</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">5,000,000</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">27.94</td><td style="text-align: left">%</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">26.96</td><td style="text-align: left">%</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">5,000,000</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">$</td>
    <td style="text-align: left">1.09<sup>(4)</sup></td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">5,000,000</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">27.94</td><td style="text-align: left">%</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">26.96</td><td style="text-align: left">%</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">5,450,000</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">$</td>
    <td style="text-align: left">1.25</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">5,000,000</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">27.94</td><td style="text-align: left">%</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">26.96</td><td style="text-align: left">%</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">6,250,000</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">$</td>
    <td style="text-align: left">1.50</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">5,000,000</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">27.94</td><td style="text-align: left">%</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">26.96</td><td style="text-align: left">%</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">7,500,000</td><td style="text-align: left">&#160;</td></tr>
  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0in"/><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(1)</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Although
the Common Stock Purchase Agreement provides that we may sell up to $145.1 million of our Class A Common Stock in remaining available
proceeds to White Lion, we are only registering 5,000,000 shares under this prospectus that we may issue and sell to White Lion in the
future under the Common Stock Purchase Agreement, if and when we elect to sell shares of our Class A Common Stock to White Lion under
the Common Stock Purchase Agreement.</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0in"/><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(2)</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
denominator is based on 12,895,544 shares of our Class A Common Stock outstanding as of January 15, 2025, plus the number of shares set
forth in the adjacent column that we would have issued or sold to White Lion, assuming the average purchase price in the first column.
The numerator is based on the number of shares of our Class A Common Stock issuable under the Common Stock Purchase Agreement (that are
the subject of this offering) at the corresponding assumed average purchase price set forth in the first column.</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(3)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The denominator is based on 12,895,544 shares of our Class A Common Stock outstanding as of January 15, 2025, plus the number of shares set forth in the adjacent column that we would have issued or sold to White Lion, assuming the average purchase price in the first column, plus the 650,000 shares remaining available for issuance and resale by White Lion under the Prior Registration Statement. The numerator is based on the number of shares of our Class A Common Stock issuable under the Common Stock Purchase Agreement (that are the subject of this offering) at the corresponding assumed average purchase price set forth in the first column. </span></td></tr>
  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: top">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(4)</span></td>
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The closing sale price of our Class A Common Stock on January 15, 2025.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->43<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt"></p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><div><a id="k_009"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>USE OF PROCEEDS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">All of the securities offered
by the Selling Securityholders pursuant to this prospectus will be sold by the Selling Securityholders for their respective accounts.
We will not receive any of the proceeds from these sales, except we may receive proceeds of up to $145.1 in remaining available proceeds
from the sale of the shares to White Lion under the Common Stock Purchase Agreement (assuming 4,350,000 shares have been previously issued
and sold by the Company to White Lion as of the date of this prospectus), from time to time in our discretion after the date the registration
statement that includes this prospectus is declared effective and after satisfaction of other conditions in the Common Stock Purchase
Agreement. See &#8220;<i>Plan of Distribution</i>&#8221; elsewhere in this prospectus for more information.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We expect to use the net proceeds
from the sales pursuant to the Common Stock Purchase Agreement, if any, for general corporate purposes. We will have broad discretion
over the use of any proceeds from such sales or exercise. We cannot specify with certainty all of the particular uses for the net proceeds
that we will have from the sale of our shares pursuant to the Common Stock Purchase Agreement.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Selling Securityholders
will pay any underwriting discounts and commissions and expenses incurred by them for brokerage, accounting, tax or legal services or
any other expenses incurred in disposing of the securities. We will bear the costs, fees and expenses incurred in effecting the registration
of the securities covered by this prospectus, including all registration and filing fees, NYSE American listing fees and fees and expenses
of our counsel and our independent registered public accounting firm.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></p><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->44<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt"></p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Introduction</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">EON Resources Inc. is providing
the following unaudited pro forma combined financial information to aid EON&#8217;s stockholders in their analysis of the financial aspects
of the Purchase. The unaudited pro forma combined financial information has been prepared in accordance with Article&#160;11 of Regulation&#160;S-X.
The unaudited pro forma combined statement of operations for the year ended December 31, 2023 combines the historical statements of operations
of EON and Pogo for such periods on a pro forma basis as if the Purchase had been consummated on January&#160;1, 2023. An unaudited pro
forma combined balance sheet is not presented since the Company&#8217;s audited consolidated balance sheet as of December 31, 2023 included
in its Annual Report on Form 10-K filed with the SEC on May 3, 2024 includes the effect of the Purchase. An unaudited pro forma combined
statement of operations for the three months ended March 31, 2024 or the three and six months ended June 30, 2024 is not presented since
the Company&#8217;s unaudited consolidated statement of operations for the three months ended March 31, 2024 included in its Quarterly
Report on Form 10-Q filed with the SEC on May 20, 2024 and the three and six months ended June 30, 2024 included in its Quarterly Report
on Form 10-Q filed with the SEC on August 19, 2024, include the effect of the Purchase.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The unaudited pro forma combined
financial information has been presented for illustrative purposes only and is not necessarily indicative of the financial position and
results of operations that would have been achieved had the Purchase occurred on the dates indicated. The unaudited pro forma combined
financial information may not be useful in predicting the future financial condition and results of operations of the Post-Purchase company.
The actual financial position and results of operations may differ significantly from the pro forma amounts reflected herein due to a
variety of factors. The unaudited pro forma adjustments represent management&#8217;s estimates based on information available as of the
date of the unaudited pro forma combined financial information and is subject to change as additional information becomes available and
analyses are performed. This information should be read together with EON&#8217;s audited consolidated financial statements and related
footnotes and Management&#8217;s Discussion and Analysis for the period from November 15, 2023 to December&#160;31, 2023 (Successor),
the period from January 1, 2023 to November 14, 2023 (Predecessor) included in the Form&#160;10-K for the year ended December 31, 2023
filed with the SEC on May 3, 2024 (the &#8220;EON Form 10-K&#8221;), EON&#8217;s unaudited consolidated financial statements and related
footnotes and Management&#8217;s Discussion and Analysis for the three months ended March 31, 2024 included in the Form 10-Q for the three
months ended March 31, 2024 filed with the SEC on May 20, 2024, EON&#8217;s unaudited consolidated financial statements and related footnotes
and Management&#8217;s Discussion and Analysis for the three and six months ended June 30, 2024 included in the Form 10-Q for the three
and six months ended June 30, 2024 filed with the SEC on August 19, 2024 and other financial information included in the prospectus.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Purchase was accounted
for as a business combination in accordance with GAAP.&#160;EON was determined to be the accounting acquirer based on an evaluation of
the following facts and circumstances:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -24pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">EON&#8217;s
senior management will comprise the senior management of the combined company;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -24pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">EON
will control a majority of the initial Board of Directors;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -24pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">EON&#8217;s
existing equityholders will have a majority voting interest in the Post-Combination company.</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On November 15, 2023 (the
&#8220;Closing Date&#8221;), as contemplated by the MIPA:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">EON
filed a Second Amended and Restated Certificate of Incorporation (the &#8220;Second A&amp;R Charter&#8221;) with the Secretary of State
of the State of Delaware, pursuant to which the number of authorized shares of EON&#8217;s capital stock, par value $0.0001 per share,
was increased to 121,000,000 shares, consisting of (i) 100,000,000 shares of Class A common stock, par value $0.0001 per share (the &#8220;Class
A Common Stock&#8221;), (ii) 20,000,000 shares of Class B common stock, par value $0.0001 per share (the &#8220;Class B Common Stock&#8221;),
and (iii) 1,000,000 shares of preferred stock, par value $0.0001 per share;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
current shares of common stock of EON were reclassified as Class A Common Stock, the Class B Common Stock have no economic rights but
entitles its holder to one vote on all matters to be voted on by stockholders generally, holders of shares of Class A Common Stock and
shares of Class B Common Stock will vote together as a single class on all matters presented to our stockholders for their vote or approval,
except as otherwise required by applicable law or by the Second A&amp;R Charter;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 51; Value: 1 --><div>
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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt"></p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Immediately following the SPAC Contribution, OpCo contributed $900,000 to SPAC Subsidiary in exchange for 100% of the outstanding common stock of SPAC Subsidiary (the &#8220;SPAC Subsidiary Contribution&#8221;); and</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Immediately following the SPAC Subsidiary Contribution, Seller sold, contributed, assigned, and conveyed to (A) OpCo, and OpCo acquired and accepted from Seller, ninety-nine&#160;percent (99.0%) of the outstanding membership interests of Pogo Resources, LLC, a Texas limited liability company (&#8220;Pogo&#8221; or the &#8220;Target&#8221;), and (B) SPAC Subsidiary, and SPAC Subsidiary purchased and accepted from Seller, one percent (1.0%) of the outstanding membership interest of Target (together with the ninety-nine&#160;(99.0%) interest, the &#8220;Target Interests&#8221;), in each case, in exchange for (x) $900,000 of the Cash Consideration (as defined below) in the case of SPAC Subsidiary and (y) the remainder of the Aggregate Consideration (as defined below) in the case of OpCo (such transactions, together with the SPAC Contribution and SPAC Subsidiary Contribution, the &#8220;Acquisition&#8221;).</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The &#8220;Aggregate Consideration&#8221;
for the Pogo Business was (a),&#160;cash in the amount of $31,074,127 in immediately available funds (the &#8220;Cash Consideration&#8221;),
(b) 2,000,000 Class B common units of OpCo (&#8220;OpCo Class B Units&#8221;) (the &#8220;Common Unit Consideration&#8221;), which will
be equal to and exchangeable into 2,000,000&#160;shares of Class A Common Stock issuable upon exercise of the OpCo Exchange Right (as
defined below), as reflected in the amended and restated limited liability company agreement of OpCo that became effective at Closing
(the &#8220;A&amp;R OpCo LLC Agreement&#8221;), (c) and the 2,000,000 Seller Class B Shares, (d) $15,000,000 payable through a promissory
note to Seller (the &#8220;Seller Promissory Note&#8221;), (e) 1,500,000 preferred units of OpCo (the &#8220;OpCo Preferred Units&#8221;
and together with the Opco Class A Units and the OpCo Class B Units, the &#8220;OpCo Units&#8221;) of OpCo (the &#8220;Preferred Unit
Consideration&#8221;, and, together with the Common Unit Consideration, the &#8220;Unit Consideration&#8221;), and (f) an agreement to,
on or before November 21, 2023, Buyer shall settle and pay to Seller $1,925,873 from sales proceeds received from oil and gas production
attributable to Pogo, including pursuant to its third party contract with affiliates of Chevron. At Closing, 500,000 Seller Class B Shares
(the &#8220;Escrowed Share Consideration&#8221;) were placed in escrow for the benefit of Buyer pursuant to an escrow agreement and the
indemnity provisions in the MIPA. The Aggregate Consideration is subject to adjustment in accordance with the MIPA.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Effective June 20, 2024, the
Company and the Seller entered into a settlement agreement and release. Under the settlement agreement and release, and in settlement
of the working capital provisions of the Amended MIPA, the Seller agreed to waive all rights and claims to the amount of royalties payable
under the ORRI as of December 31, 2023, totaling $1,523,138 and agreed to pay certain amounts related to vendor payable claims assumed
by the Company at Closing.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>OpCo A&amp;R LLC Agreement </i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In connection with the Closing,
EON and Pogo Royalty, LLC, a Texas limited liability company, an affiliate of Seller and Seller&#8217;s designated recipient of the Aggregate
Consideration (&#8220;Pogo Royalty&#8221;), entered into an amended and restated limited liability company agreement of OpCo (the &#8220;OpCo
A&amp;R LLC Agreement&#8221;). Pursuant to the A&amp;R OpCo LLC Agreement, each OpCo unitholder (excluding EON) will, subject to certain
timing procedures and other conditions set forth therein, have the right(the &#8220;OpCo Exchange Right&#8221;) to exchange all or a portion
of its OpCo Class B Units for, at OpCo&#8217;s election,(i) shares of Class A Common Stock at an exchange ratio of one share of Class
A Common Stock for each OpCo Class B Unit exchanged, subject to conversion rate adjustments for stock splits, stock dividends and reclassifications
and other similar transactions, or (ii) an equivalent amount of cash. Additionally, the holders of OpCo Class B Units will be required
to exchange all of their OpCo Class B Units (a &#8220;Mandatory Exchange&#8221;) upon the occurrence of the following: (i) upon the direction
of EON with the consent of at least fifty percent (50%) of the holders of OpCo Class B Units; or (ii) upon the one-year anniversary of
the Mandatory Conversion Trigger Date. In connection with any exchange of OpCo Class B Units pursuant to the OpCo Exchange Right or acquisition
of OpCo Class B Units pursuant to a Mandatory Exchange, a corresponding number of shares of Class B Common Stock held by the relevant
OpCo unitholder will be cancelled.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Immediately upon the Closing,
Pogo Royalty exercised the OpCo Exchange Right as it relates to 200,000 OpCo Class B units (and 200,000 shares of Class B Common Stock).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The OpCo Preferred Units&#160;will
be automatically converted into OpCo Class&#160;B Units&#160;on the two-year anniversary of the issuance date of such OpCo Preferred Units&#160;(the
&#8220;Mandatory Conversion Trigger Date&#8221;) at a rate determined by dividing (i)&#160;$20.00 per unit (the &#8220;Stated Conversion
Value&#8221;), by (ii)&#160;the Market Price of the Class&#160;A Common Stock, (the &#8220;Conversion Price&#8221;). The &#8220;Market
Price&#8221; means the simple average of the daily VWAP of the Class&#160;A Common Stock during the five (5)&#160;trading days prior to
the date of conversion. On the Mandatory Conversion Trigger Date, the Company will issue a number of shares of Class&#160;B Common Stock
to Seller equivalent to the number of OpCo Class&#160;B Units&#160;issued to Seller. If not exchanged sooner, such newly issued OpCo Class&#160;B
Units&#160;shall automatically exchange into Class&#160;A Common Stock on the one-year anniversary of the Mandatory Conversion Trigger
Date at a ratio of one OpCo Class&#160;B Unit for one share of Class&#160;Common Stock. An equivalent number of shares of Class&#160;B
Common Stock must be surrendered with the OpCo Class&#160;B Units&#160;to the Company in exchange for the Class&#160;A Common Stock. As
noted above, the OpCo Class B Units must be exchanged upon the one-year anniversary of the Mandatory Conversion Trigger Date.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Option Agreement</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In connection with the Closing,
HNRA Royalties, LLC, a newly formed Delaware limited liability company and wholly-owned subsidiary of EON (&#8220;HNRA Royalties&#8221;)
and Pogo Royalty entered into an Option Agreement (the &#8220;Option Agreement&#8221;). Pogo Royalty owns certain overriding royalty interests
in certain oil and gas assets owned by Pogo Resources, LLC (the &#8220;ORR Interest&#8221;). Pursuant to the Option Agreement, Pogo Royalty
granted irrevocable and exclusive option to HNRA Royalties to purchase the ORR Interest for the Option Price (as defined below) at any
time prior to November 15, 2024. The option is not exercisable while the Seller Promissory Note is outstanding.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The purchase price for the
ORR Interest upon exercise of the option is: (i)&#160;(1)&#160;$30,000,000 the (&#8220;Base Option Price&#8221;), plus (2)&#160;an additional
amount equal to annual interest on the Base Option Price of twelve percent (12%), compounded monthly, from the Closing Date through the
date of acquisition of the ORR Interest, minus (ii)&#160;any amounts received by Pogo Royalty in respect of the ORR Interest from the
month of production in which the effective date of the Option Agreement occurs through the date of the exercise of the option (such aggregate
purchase price, the &#8220;Option Price&#8221;).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 1in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Option Agreement and the
option will immediately terminate upon the earlier of (a)&#160;Pogo Royalty&#8217;s transfer or assignment of all of the ORR Interest
in accordance with the Option Agreement and (b)&#160;November 15, 2024. As consideration for the Option Agreement, EON issued 10,000 shares
of Class A Common Stock to Pogo Royalty with a fair value of $67,700. Pogo Royalty obtained the ORR Interest effective July 1, 2023, when
the Predecessor transferred to Pogo Royalty an assigned and undivided royalty interest equal in amount to ten percent (10%) of the Predecessors&#8217;
interest all oil, gas and minerals in, under and produced from each lease. The Predecessor recognized a loss on sale of assets of $816,011
in connection with this transaction.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Backstop Agreement</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In connection with the Closing,
EON entered a Backstop Agreement (the &#8220;Backstop Agreement&#8221;) with Pogo Royalty and certain of EON&#8217;s founders listed therein
(the &#8220;Founders&#8221;) whereby the Pogo Royalty will have the right (&#8220;Put Right&#8221;) to cause the Founders to purchase
Seller&#8217;s OpCo Preferred Units&#160;at a purchase price per unit equal to $10.00 per unit plus the product of (i)&#160;the number
of&#160;days elapsed since the effective date of the Backstop Agreement and (ii)&#160;$10.00 divided by 730. Seller&#8217;s right to exercise
the Put Right will survive for six (6)&#160;months following the date the Trust Shares (as defined below) are not restricted from transfer
under the Letter Agreement (as defined in the MIPA) (the &#8220;Lockup Expiration Date&#8221;).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As security that the Founders
will be able to purchase the OpCo Preferred Units&#160;upon exercise of the Put Right, the Founders agreed to place at least 1,300,000&#160;shares
of Class&#160;A Common Stock into escrow (the &#8220;Trust Shares&#8221;), which the Founders can sell or borrow against to meet their
obligations upon exercise of the Put Right, with the prior consent of Seller. EON is not obligated to purchase the OpCo Preferred Units&#160;from
Pogo Royalty under the Backstop Agreement. Until the Backstop Agreement is terminated, Pogo Royalty and its affiliates are not permitted
to engage in any transaction which is designed to sell short the Class&#160;A Common Stock or any other publicly traded securities of
EON.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Founder Pledge Agreement&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In connection with the Closing,
we entered a Founder Pledge Agreement (the &#8220;Founder Pledge Agreement&#8221;) with the Founders whereby, in consideration of placing
the Trust Shares into escrow and entering into the Backstop Agreement, we agreed: (a) by January 15, 2024, to issue to the Founders an
aggregate number of newly issued shares of Class A Common Stock equal to 10% of the number of Trust Shares; (b) by January 15, 2024, to
issue to the Founders number of warrants to purchase an aggregate number of shares of Class A Common Stock equal to 10% of the number
of Trust Shares, which such warrants shall be exercisable for five years from issuance at an exercise price of $11.50 per shares; (c)
if the Backstop Agreement is not terminated prior to the Lockup Expiration Date, to issue an aggregate number of newly issued shares of
Class A Common Stock equal to&#160;(i) (A) the number of Trust Shares,&#160;<i>divided by&#160;</i>(B) the simple average of the daily
VWAP of the Class A Common Stock during the five (5) Trading Days prior to the date of the termination of the Backstop Agreement, subject
to a minimum of $6.50 per share,&#160;<i>multiplied by&#160;</i>(C) a price between $10.00-$13.00 per share (as further described in the
Founder Pledge Agreement),&#160;<i>minus&#160;</i>(ii) the number of Trust Shares; and (d) following the purchase of&#160;OpCo Preferred
Units by a Founder pursuant to the Put Right, to issue a&#160;number of newly issued shares of Class A Common Stock equal to the number
of Trust Shares sold by such Founder.&#160;Until the Founder Pledge Agreement is terminated, the Founders are not permitted to engage
in any transaction which is designed to sell short the Class&#160;A Common Stock or any other of our publicly traded securities.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The above description of the
Founder Pledge Agreement is a summary only and is qualified in its entirety by the text of the Founder Pledge Agreement. In consideration
for entering into the Backstop agreement, the Company issued the Founders an aggregate of 134,500 shares of Class A Common Stock, with
a fair value of $910,565 based on the closing price of the Company&#8217;s common stock of $6.77 on November 15, 2023.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><span style="text-decoration:underline">Debt Financing</span></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Senior Secured Term Loan Agreement</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In connection with the Closing,
we (for purposes of the Loan Agreement, the &#8220;Borrower&#8221;) and First International Bank &amp; Trust&#160;(&#8220;FIBT&#8221;
or &#8220;Lender&#8221;), OpCo, SPAC Subsidiary, Pogo, and LH Operating, LLC (for purposes of the Loan Agreement, collectively, the &#8220;Guarantors&#8221;
and together with the Borrower, the &#8220;Loan Parties&#8221;), and FIBT entered into a Senior Secured Term Loan Agreement on November
15, 2023 (the &#8220;Loan Agreement&#8221;), setting forth the terms of a senior secured term loan facility in an aggregate principal
amount of $28,000,000 (the &#8220;Term Loan&#8221;).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the terms of the
Term Loan Agreement, the Term Loan was advanced in one tranche on the Closing Date. The proceeds of the Term Loan were used to (a) fund
a portion of the purchase price, (b)&#160;partially fund a debt service reserve account funded with $2,600,000 at the Closing Date, (c)
pay fees and expenses in connection with the purchase and the closing of the Term Loan and (e) other general corporate purposes. The Term
Loan accrues interest at a per annum rate equal to the FIBT prime rate plus 6.5% and fully matures on the third anniversary of the Closing
Date&#160;(&#8220;Maturity Date&#8221;). Payments of principal and interest will be due on the 15<sup>th</sup>&#160;day of each calendar
month, beginning December 15, 2023, each in an amount equal to the Monthly Payment Amount (as defined in the Term Loan Agreement), except
that the principal and interest payment due on the Maturity Date will be in the amount of the entire remaining principal amount of the
Term Loan and all accrued but unpaid interest then outstanding. An additional one-time payment of principal is due on the date the annual
financial report for the year ending December 31, 2024, is due to be delivered by Borrower to Lender in an amount that Excess Cash Flow
(as defined in the Term Loan Agreement) exceeds the Debt Service Coverage Ratio (as defined in the Term Loan Agreement) of 1.35x as of
the end of such quarter; provided that in no event shall the amount of the payment exceed $5,000,000.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Borrower may elect to
prepay all or a portion greater than $1,000,000 of the amounts owed prior to the Maturity Date. In addition to the foregoing, the Borrower
is required to prepay the Term Loan with the net cash proceeds of certain dispositions and upon the decrease in value of collateral.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On the Closing Date, Borrower
deposited $2,600,000 into a Debt Service Reserve Account (the &#8220;Debt Service Reserve Account&#8221;) and, within 60 days following
the Closing Date, Borrower must deposit such additional amounts such that the balance of the Debt Service Reserve Account is equal to
$5,000,000 at all times.&#160;The Debt Service Reserve Account may be used by Lender at any time and from time to time, in Lender&#8217;s
sole discretion, to pay (or to supplement Borrower&#8217;s payments of) the obligations due under the Term Loan Agreement.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Term Loan Agreement contains
affirmative and restrictive covenants and representations and warranties. The Loan Parties are bound by certain affirmative covenants
setting forth actions that are required during the term of the Term Loan Agreement, including, without limitation, certain information
delivery requirements, obligations to maintain certain insurance, and certain notice requirements. Additionally, the Loan Parties from
time to time will be bound by certain restrictive covenants setting forth actions that are not permitted to be taken during the term of
the Term Loan Agreement without prior written consent, including, without limitation, incurring certain additional indebtedness, entering
into certain hedging contracts, consummating certain mergers, acquisitions or other business combination transactions, consummating certain
dispositions of assets, making certain payments on subordinated debt, making certain investments, entering into certain transactions with
affiliates, and incurring any non-permitted lien or other encumbrance on assets. The Term Loan Agreement also contains other customary
provisions, such as confidentiality obligations and indemnification rights for the benefit of the Lender. The Company was in compliance
with covenants of the Term Loan Agreement as of December 31, 2023.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>Pledge and Security Agreement</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In connection with the Term
Loan, FIBT and the Loan Parties&#160;entered into a Pledge and Security Agreement on November 15, 2023 (the &#8220;Security Agreement&#8221;),
whereby the Loan Parties granted a senior security interest to FIBT on all assets of the Loan Parties, except certain excluded assets
described therein, including, among other things, any interests in the ORR Interest.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>Guaranty Agreement</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In connection with the Term
Loan, FIBT and the Loan Parties&#160;entered into a Guaranty Agreement on November 15, 2023 (the &#8220;Guaranty Agreement&#8221;), whereby
the Guarantors guaranteed payment and performance of all Loan Parties under the Term Loan Agreement.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Company paid deferred
finance costs of $1,093,318 related to the loan, which are reflect as debt discount. For the period from November 15, 2023 to December
31, 2023, the Company amortized $56,422 to interest expense. As of December 31, 2023, the principal balance on the Term Loan was $27,680,7063,
unamortized discount was&#160;$1,036,895 and accrued interest was $173,004.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Subordination Agreement</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In connection with the Term
Loan and the Seller Promissory Note, the Lenders, the Sellers and the Company entered into a Subordination Agreement whereby the Sellers
cannot require repayment, nor commence any action or proceeding at law or equity against the Company or the Lenders to recover any or
all of the unpaid Seller Promissory Note until the Term Loan is repaid in full.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Seller Promissory Note</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In connection with the Closing,
OpCo issued the Seller Promissory Note to Pogo Royalty in the principal amount of $15,000,000. The Seller Promissory Note matures on May
15, 2024, bears an interest rate equal 12% per annum, and contains no penalty for prepayment. If the Seller Promissory Note is not repaid
in full on or prior to its stated maturity date, OpCo will owe interest from and after default equal to the lesser of 18% per annum and
the highest amount permissible under law, compounded monthly. The Seller Promissory Note is subordinated to the Term Loan as discussed
above. Accrued interest on the Seller Promissory Note was $277,397 as of December 31, 2023. As a result of the Subordination Agreement,
the Company has classified the Seller Promissory Note as a long-term liability on the consolidated balance sheet.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Forward Purchase Agreement</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On November 2, 2023, the Company
entered into an agreement with (i) Meteora Capital Partners, LP (&#8220;MCP&#8221;), (ii) Meteora Select Trading Opportunities Master,
LP (&#8220;MSTO&#8221;), and (iii) Meteora Strategic Capital, LLC (&#8220;MSC&#8221; and, collectively with MCP and MSTO, &#8220;FPA Seller&#8221;)
(the &#8220;Forward Purchase Agreement&#8221;) for OTC Equity Prepaid Forward Transactions. For purposes of the Forward Purchase Agreement,
the Company is referred to as the &#8220;Counterparty&#8221;. Capitalized terms used herein but not otherwise defined shall have the meanings
ascribed to such terms in the Forward Purchase Agreement.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Forward Purchase Agreement
provides for a prepayment shortfall in an amount in U.S. dollars equal to 0.50% of the product of the Recycled Shares and the Initial
Price (defined below). FPA Seller in its sole discretion may sell Recycled Shares (i) at any time following November 2, 2023 (the &#8220;Trade
Date&#8221;) at prices greater than the Reset Price or (ii) commencing on the 180th day following the Trade Date at any sales price, in
either case without payment by FPA Seller of any Early Termination Obligation until such time as the proceeds from such sales equal 100%
of the Prepayment Shortfall (as set forth under the section entitled &#8220;Shortfall Sales&#8221; in the Forward Purchase Agreement)
(such sales, &#8220;Shortfall Sales,&#8221; and such Shares, &#8220;Shortfall Sale Shares&#8221;). A sale of Shares is only (a) a &#8220;Shortfall
Sale,&#8221; subject to the terms and conditions herein applicable to Shortfall Sale Shares, when a Shortfall Sale Notice is delivered
under the Forward Purchase Agreement, and (b) an Optional Early Termination, subject to the terms and conditions of the Forward Purchase
Agreement applicable to Terminated Shares, when an OET Notice is delivered under the Forward Purchase Agreement, in each case the delivery
of such notice in the sole discretion of the FPA Seller (as further described in the &#8220;Optional Early Termination&#8221; and &#8220;Shortfall
Sales&#8221; sections in the Forward Purchase Agreement).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Following the Closing, the
reset price (the &#8220;Reset Price&#8221;) will be $10.00; provided that the Reset Price shall be reduced pursuant to a Dilutive Offering
Reset immediately upon the occurrence of such Dilutive Offering. The Purchased Amount subject to the Forward Purchase Agreement shall
be increased upon the occurrence of a Dilutive Offering Reset to that number of Shares equal to the quotient of (i) the Purchased Amount
divided by (ii) the quotient of (a) the price of such Dilutive Offering divided by (b) $10.00.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">From time to time and on any
date following the Trade Date (any such date, an &#8220;OET Date&#8221;) and subject to the terms and conditions in the Forward Purchase
Agreement, FPA Seller may, in its absolute discretion, terminate the Transaction in whole or in part by providing written notice to Counterparty
(the &#8220;OET Notice&#8221;), by the later of (a) the fifth Local Business Day following the OET Date and (b) no later than the next
Payment Date following the OET Date, (which shall specify the quantity by which the Number of Shares shall be reduced (such quantity,
the &#8220;Terminated Shares&#8221;)). The effect of an OET Notice shall be to reduce the Number of Shares by the number of Terminated
Shares specified in such OET Notice with effect as of the related OET Date. As of each OET Date, Counterparty shall be entitled to an
amount from FPA Seller, and the FPA Seller shall pay to Counterparty an amount, equal to the product of (x) the number of Terminated Shares
and (y) the Reset Price in respect of such OET Date. The payment date may be changed within a quarter at the mutual agreement of the parties.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The &#8220;Valuation Date&#8221;
will be the earlier to occur of (a) the date that is three (3) years after the date of the closing of the Purchase &amp; Sale (the date
of the closing of the Purchase &amp; Sale, the &#8220;Closing Date&#8221;) pursuant to the A&amp;R MIPA, (b) the date specified by FPA
Seller in a written notice to be delivered to Counterparty at FPA Seller&#8217;s discretion (which Valuation Date shall not be earlier
than the day such notice is effective) after the occurrence of any of (w) a VWAP Trigger Event, (x) a Delisting Event, (y) a Registration
Failure or (z) unless otherwise specified therein, upon any Additional Termination Event, and (c) the date specified by FPA Seller in
a written notice to be delivered to Counterparty at FPA Seller&#8217;s sole discretion (which Valuation Date shall not be earlier than
the day such notice is effective). The Valuation Date notice will become effective immediately upon its delivery from FPA Seller to Counterparty
in accordance with the Forward Share Purchase Agreement.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 1in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On the &#8220;Cash Settlement
Payment Date,&#8221; which is the tenth Local Business Day immediately following the last day of the Valuation Period, the FPA Seller
will remit to the Counterparty an amount equal to the Settlement Amount and will not otherwise be required to return to the Counterparty
any of the Prepayment Amount and the Counterparty shall remit to the FPA Seller the Settlement Amount Adjustment; provided, that if the
Settlement Amount less the Settlement Amount Adjustment is a negative number and either clause (x) of Settlement Amount Adjustment applies
or the Counterparty has elected pursuant to clause (y) of Settlement Amount Adjustment to pay the Settlement Amount Adjustment in cash,
then neither the FPA Seller nor the Counterparty shall be liable to the other party for any payment under the Cash Settlement Payment
Date section of the Forward Purchase Agreement.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The FPA Seller agreed to waive
any redemption rights with respect to any Recycled Shares in connection with the Closing, as well as any redemption rights under the Company&#8217;s
certificate of incorporation that would require redemption by the Company.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The purpose of our entering
into this agreement and these transactions was to provide a mechanism whereby FPA Seller would purchase, and waive their redemption rights
with respect to, a sufficient number of shares of our common stock to enable us to have at least $5,000,000 of net tangible assets, a
non-waivable condition to the Closing of the Purchase, to provide the Company with cash to meet a portion of the transaction costs associated
with the Purchase, and to provide the Company with a mechanism to raise cash in the future at maturity. As of the date of this prospectus,
however, the Company has not made any issuances, and has not received any proceeds, from Meteora pursuant to the Forward Purchase Agreement,
and the Company is actively pursuing a mutual recission of the Forward Purchase Agreement.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the Forward Purchase
Agreement, the FPA Seller obtained 50,070 shares (&#8220;Recycled Shares&#8221;) and such purchase price of $545,356,&#160;or&#160;$10.95&#160;per
share,&#160;was funded by the use of our trust account proceeds as a partial prepayment (&#8220;Prepayment Amount&#8221;), and the FPA
Seller may purchase an additional 504,425 additional shares under the Forward Purchase Agreement, for the Forward Purchase Agreement redemption&#160;3&#160;years
from the date of the Acquisition (&#8220;Maturity Date&#8221;).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The FPA Seller received an
additional $1,004,736 in cash from the Trust Account related to reimbursement for 90,000 shares of Class A Common stock purchased by the
FPA Seller in connection with the transactions at the redemption price of $10.95 per share and transaction fees.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Maturity Date may be accelerated,
at the FPA Sellers&#8217; discretion, if the Company share price trades below $3.00&#160;per share for any&#160;10&#160;trading days during
a&#160;30-day consecutive trading-day period or the Company is delisted. The Company&#8217;s common stock traded below minimum trading
price during the period from November 15, 2023 to December 31, 2023, but no acceleration of the Maturity Date has been executed by the
FPA Seller to date.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The fair value of the prepayment
was $14,257,648 at inception of the agreement, $6,066,324 as of the Closing date and was $6,067,094 as of December 31, 2023, and is included
as a reduction of additional paid-in capital on the consolidated statement of stockholders&#8217; equity. The estimated fair value of
the Maturity Consideration is $1,704,416. The Company recognized a gain from the change in fair value of the Forward Purchase Agreement
of $3,268,581 during the period from November 15, 2023 to December 31, 2023.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Non-Redemption Agreement</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On November 13, 2023, we entered
into an agreement with (i) Meteora Capital Partners, LP (&#8220;MCP&#8221;), (ii) Meteora Select Trading Opportunities Master, LP (&#8220;MSTO&#8221;),
and (iii) Meteora Strategic Capital, LLC (&#8220;MSC&#8221; and, collectively with MCP and MSTO, &#8220;Backstop Investor&#8221;) (the
&#8220;Non-Redemption Agreement&#8221;) pursuant to which Backstop Investor agreed to reverse the redemption of 600,000 shares of our
Common Stock. Immediately upon consummation of the closing of the transactions contemplated by the MIPA, we paid the Backstop Investor,
in respect of the Backstop Investor Shares, an amount in cash equal to (x) the Backstop Investor Shares, multiplied by (y) the Redemption
Price (as defined in our then current-amended and restated certificate of incorporation) minus $5.00, or $3,567,960. We paid the Backstop
Investor a total of $6,017,960 in cash related to the Non-Redemption Agreement from proceeds of the Trust Account</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Exchange Agreements</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On November 13, 2023, we entered
into exchange agreements (&#8220;Exchange Agreements&#8221;) with certain holders (the &#8220;Noteholders&#8221;) of promissory notes
issued by us for working capital purposes which accrued interest at a rate of 15% per annum (the &#8220;Notes&#8221;). Pursuant to the
Exchange Agreements, we agreed to exchange, in consideration of the surrender and termination of the Notes in an aggregate principal amount
(including interest accrued thereon) of $2,257,771, for 451,563 shares of Common Stock at a price per share equal to $5.00 per share.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Noteholders include JVS
Alpha Property, LLC, a company which is controlled by Joseph Salvucci, Jr., a member of our board of directors, Dante Caravaggio, a member
of our board of directors and our Chief Executive Officer, Byron Blount, a member of our board of directors, and Mitchell B. Trotter,
our Chief Financial Officer and a member of our board of directors.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The unaudited pro forma adjustments
are based on information currently available, assumptions, and estimates underlying the unaudited pro forma adjustments and are described
in the accompanying notes. Actual results may differ materially from the assumptions used to present the accompanying unaudited pro forma
combined financial information. Assumptions and estimates underlying the unaudited pro forma adjustments included in the unaudited pro
forma combined financial statements are described in the accompanying notes.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>EON RESOURCES INC.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>(F/K/A HNR ACQUISITION CORP)<br/>
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS<br/>
FOR THE YEAR ENDED DECEMBER 31, 2023</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">EON Resources Inc.<br/> November&#160;15,<br/>
2023 to<br/>
December&#160;31,<br/> 2023</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">POGO <br/> Resources <br/> LLC <br/> January 1,<br/>
2023 to<br/>
November&#160;14,<br/>
2023</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Transaction <br/> Accounting <br/> Adjustments</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Combined <br/> Pro Forma</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>Revenue</td><td style="font-weight: bold; font-style: italic">&#160;</td>
    <td colspan="2" style="font-weight: bold; font-style: italic; text-align: center">Successor</td><td style="font-weight: bold; font-style: italic">&#160;</td><td style="font-weight: bold; font-style: italic">&#160;</td>
    <td colspan="2" style="font-weight: bold; font-style: italic; text-align: center">Predecessor</td><td style="font-weight: bold; font-style: italic">&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: right">&#160;</td><td>&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: right">&#160;</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; width: 46%; text-align: left">Crude Oil</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">2,513,197</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">22,856,521</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">(1,350,074</td><td style="width: 1%; text-align: left">)</td><td style="width: 1%; font-weight: bold">&#160;</td>
    <td style="text-align: center; width: 5%; font-weight: bold">A</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">24,019,644</td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 0.125in; text-align: left">Natural gas and natural gas liquids</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">70,918</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">809,553</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(46,264</td><td style="text-align: left">)</td><td style="font-weight: bold">&#160;</td>
    <td style="text-align: center; font-weight: bold">A</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td>&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">226,062</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">2,117,800</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(117,186</td><td style="text-align: left">)</td><td style="font-weight: bold">&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">2,226,676</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">1,453,367</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">8,692,752</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">10,146,119</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">352,127</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">1,497,749</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">204,885</td><td style="text-align: left">&#160;</td><td style="font-weight: bold">&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">2,054,761</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">11,062</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">848,040</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">859,102</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">3,553,117</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">3,700,267</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(193,332</td><td style="text-align: left">)</td><td style="font-weight: bold">&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">7,060,052</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">9,999,860</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">&#8212;</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(9,999,860</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td style="text-align: center; font-weight: bold; padding-bottom: 1.5pt">D</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">&#8212;</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">16,856,608</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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    <td style="text-align: center; padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(12,619,934</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">7,381,874</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(8,709,154</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">3,471,094</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(816,011</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(816,011</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">187,704</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">187,704</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">3,268,581</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">3,268,581</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(1,191,553</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(364,439</td><td style="text-align: left">)</td><td style="font-weight: bold">&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(1,555,992</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(1,043,312</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(1,834,208</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(4,165,792</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(7,043,312</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(4,200,000</td><td style="text-align: left">)</td><td style="font-weight: bold">&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(1,800,000</td><td style="text-align: left">)</td><td style="font-weight: bold">&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">1,834,208</td><td style="text-align: left">&#160;</td><td style="font-weight: bold">&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">2,937</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">&#8212;</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="text-align: center; padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(71,256</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(11,388,841</td><td style="text-align: left">)</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(164,817</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">&#8212;</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left; padding-bottom: 4pt">Weighted Average shares outstanding, Class A common stock&#160;&#8211;&#160;basic and diluted</td><td style="padding-bottom: 4pt">&#160;</td>
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    <td style="padding-bottom: 4pt; text-align: left">&#160;</td><td style="padding-bottom: 4pt; text-align: right">&#160;</td><td style="padding-bottom: 4pt; text-align: left">&#160;</td><td style="padding-bottom: 4pt">&#160;</td>
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  <tr style="vertical-align: bottom; ">
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    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">(1.72</td><td style="padding-bottom: 2.5pt; text-align: left">)</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="padding-bottom: 4pt; text-align: left">&#160;</td><td style="padding-bottom: 4pt; text-align: right">&#160;</td><td style="padding-bottom: 4pt; text-align: left">&#160;</td><td style="padding-bottom: 4pt">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><!-- Field: Page; Sequence: 58; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->52<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt"></p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL
STATEMENT</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>1. Basis of Presentation</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Purchase was accounted
for as a business combination under ASC 805. The purchase price of the Pogo Business has been allocated to the assets acquired and liabilities
assumed based on their estimated relative fair values as follows: Pogo was deemed to be the predecessor entity of the Company. Accordingly,
the historical financial statements of Pogo became the historical financial statements of the Company, upon the consummation of the Purchase.
Under the acquisition method of accounting, the assets and liabilities of Pogo were recorded at their fair values measured as of the acquisition
date.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The unaudited pro forma combined
statement of operations for the year ended December&#160;31, 2023, reflects pro forma effect to the Purchase as if it had been completed
on January&#160;1, 2023.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Management has made significant
estimates and assumptions in its determination of the pro forma adjustments. As the unaudited pro forma combined financial information
has been prepared based on these preliminary estimates, the final amounts recorded may differ materially from the information presented.
The unaudited pro forma combined financial information does not give effect to any anticipated synergies, operating efficiencies, tax
savings, or cost savings that may be associated with the Purchase.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The pro forma adjustments
reflecting the consummation of the Purchase are based on certain currently available information and certain assumptions and methodologies
that we believe are reasonable under the circumstances. The unaudited pro forma adjustments, which are described in the accompanying notes,
may be revised as additional information becomes available and is evaluated. Therefore, it is likely that the actual adjustments will
differ from the pro forma adjustments and it is possible the difference may be material. EON believes that its assumptions and methodologies
provide a reasonable basis for presenting all of the significant effects of the Purchase based on information available to management
at the time and that the pro forma adjustments give appropriate effect to those assumptions and are properly applied in the unaudited
pro forma combined financial information.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The unaudited pro forma combined
financial information is not necessarily indicative of what the actual results of operations and financial position would have been had
the Purchase taken place on the dates indicated, nor are they indicative of the future consolidated results of operations or financial
position of the combined company. They should be read in conjunction with the historical financial statements and notes thereto of EON&#8217;s
Form 10-K included in this prospectus.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following unaudited pro
forma combined financial information has been prepared in accordance with Article&#160;11 of Regulation&#160;S-X,&#160;as amended by the
final rule, Release&#160;No.&#160;33-10786&#160;&#8220;Amendments to Financial Disclosures about Acquired and Disposed Businesses.&#8221;
Release&#160;No.&#160;33-10786&#160;replaces the existing pro forma adjustment criteria with simplified requirements to depict the accounting
for the Purchase (&#8220;Transaction Accounting Adjustments&#8221;) and present the reasonably estimable synergies and other transaction
effects that have occurred or are reasonably expected to occur (&#8220;Management&#8217;s Adjustments&#8221;). EON has elected not to
present Management&#8217;s Adjustments and will only be presenting Transaction Accounting Adjustments in the following unaudited pro forma
combined financial information.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>2. Accounting Policies</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Upon consummation of the Purchase,
management performed a comprehensive review of the accounting policies of the two entities. Based on its initial analysis, management
did not identify any differences that would have a material impact on the unaudited pro forma combined financial information. As a result,
the unaudited pro forma combined financial information does not assume any differences in accounting policies.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 59; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->53<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt"></p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>3. Purchase Price Allocation </b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Acquisition was accounted
for as a business combination under ASC 805. The purchase price of the Pogo Business has been allocated to the assets acquired and liabilities
assumed based on their estimated relative fair values as follows:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="font-weight: bold">Purchase Price:</td><td>&#160;</td>
    <td colspan="2" style="text-align: right">&#160;</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 88%; text-indent: -10pt; padding-left: 10pt">Cash</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">31,074,127</td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">1,925,873</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -10pt; padding-left: 10pt">Promissory note to Sellers of Pogo Business</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">15,000,000</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">67,700</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">1,354,000</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; text-indent: -10pt; padding-left: 10pt">1,800,000 OpCo Class B Units</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">12,186,000</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -10pt; padding-left: 10pt">1,500,000 OpCo Preferred Units</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">$</td><td style="text-align: right">246,323</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">3,986,559</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">368,371</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">93,809,392</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">51,907</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(2,290,475</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(1,244,633</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(775,154</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(1,199,420</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; text-indent: -10pt; padding-left: 20pt">Short-term derivative liabilities</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(27,569</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -10pt; padding-left: 20pt">Deferred tax liabilities</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(8,528,772</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; text-indent: -10pt; padding-left: 20pt">Asset retirement obligations, net</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(893,235</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -10pt; padding-left: 20pt">Other liabilities</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(675,000</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-bottom: 4pt; text-indent: -10pt; padding-left: 10pt">Net assets acquired</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">82,828,294</td><td style="padding-bottom: 4pt; text-align: left">&#160;</td></tr>
  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The fair value of the Class
A common shares is based on the closing price of the Company&#8217;s common stock at November 15, 2023, which was $6.77. The fair value
of the OpCo Class B Units is based on the equivalent of 1,800,000 shares of Class A common stock and the same closing price. The fair
value of the OpCo Preferred Units was estimated based on the present value of the maximum Stated Conversion Value of 1,500,000 units over
the two-year period using a weighted average cost of capital.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>4. Adjustments to Unaudited Pro forma combined
Financial Information</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The unaudited pro forma combined
financial information has been prepared to illustrate the effect of the Purchase and has been prepared for informational purposes only.
The pro forma combined provision for income taxes does not necessarily reflect the amounts that would have resulted had the combined company
filed consolidated income tax returns during the periods presented.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The pro forma adjustments
included in the unaudited pro forma combined statement of operations for the year&#160;ended December 31, 2023, are as follows:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -24pt"><b>&#160;</b></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(A)</b></span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Reflects the reduction of the historical results of operations of POGO for the impact of the 10% overriding royalty interest in the acquired properties not acquired by the Company.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -24pt"><b>&#160;</b></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(B)</b></span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Reflects the adjustment to depletion, depreciation and amortization for the estimated new basis of property plant and equipment and oil and gas reserves as a result of the preliminary purchase price allocation.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -24pt"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -24pt"></p><div>

</div><!-- Field: Page; Sequence: 60; Value: 1 --><div>
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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt"></p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -24pt"><b>&#160;</b></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(C)</b></span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Reflects the adjustment to include $830,000 of annual salary of the Company&#8217;s officers beginning after closing of the MIPA for three officers, pursuant to the Company&#8217;s compensation plan. This adjustment also includes the estimate of $553,333 in expense related to one year of vesting of the RSU grants to those officers that pursuant to the Company&#8217;s compensation plan. This adjustment also includes removing $1,500,000 of expense for the shares of Class A common stock&#160;&#160;issued to White Lion at closing of the MIPA in connect with the Common Stock Purchase Agreement due to the fee being non-recurring and $360,000 of consulting fees payable and $609,300 of expense related to vesting of restricted stock grants to the Company&#8217;s President and an entity controlled by the Company&#8217;s Chairman pursuant to their consulting agreements entered into in February 2023, effective November 15, 2023</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -24pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(D)</b></span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">To remove the impact of non-recurring acquisition costs</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -24pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(E)</b></span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">To recognizing a full year of amortization of deferred finance costs associated with the senior secured Term Loan</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(F)</b></span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Reflects one year of interest expense on the Senior Secured Term Loan The Senior Secured Term Loan bears interest at 15.0% per annum</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -24pt"><b>&#160;</b></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(G)</b></span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Reflects a full year of interest expense related to the issuance of the Seller Promissory Note. The Seller Promissory Note bear interests at 12% per annum.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -24pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(H)</b></span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Reflects the reversal of historical interest expense of Pogo.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -24pt"><b>&#160;</b></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(I)</b></span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Reflects the reversal of interest income earned on marketable securities held in the Trust Account.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -24pt"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>4. Pro Forma Earnings per Share</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Basic earnings per share is
computed based on the historical weighted average number of shares of common stock outstanding during the period, and the issuance of
additional shares in connection with the Purchase, assuming the shares were outstanding since January&#160;1, 2023. As the Purchase is
being reflected as if it had occurred at the beginning of the period presented, the calculation of weighted average shares outstanding
for basic and diluted net loss per share assumes that the shares issuable in connection with the Purchase have been outstanding for the
entire period presented. If the maximum number of Public Shares are redeemed, this calculation is retroactively adjusted to eliminate
such shares for the entire period presented. Diluted earnings per share is computed based on the weighted average number of shares of
common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="font-weight: bold; border-bottom: Black 1.5pt solid">For the Year Ended December 31, 2023</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Pro Forma<br/>
Combined</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 88%; text-align: left">Pro forma net loss attributable to Class A common stockholders</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">(164,817</td><td style="width: 1%; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">Pro forma net loss per share attributable to Class A common stockholders, basic and diluted</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">(0.03</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>Weighted average shares outstanding, basic and diluted</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">5,235,131</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="font-style: italic"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Excluded Securities<sup>(1)</sup></i></span></td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Public Warrants</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">8,625,000</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">Private Placement Warrants</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">505,000</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Private Warrants</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">5,434,000</td><td style="text-align: left">&#160;</td></tr>
  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(1)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The potentially dilutive outstanding securities were excluded from the computation of pro forma net income per share, basic and diluted, because their effect would have been anti-dilutive, due to the exercise price of the Public Warrants, Private Placement and Private Warrants being greater that the average market price of the Company&#8217;s common stock.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->55<!-- Field: /Sequence --></p></div><div>
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    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><div><a id="k_010"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>BUSINESS OF EON</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Overview</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">EON Resources Inc. (f/k/a
HNR Acquisition Corp), was incorporated in Delaware as a blank check company formed for the purpose of effecting a merger, capital stock
exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses or entities. Prior
to closing the Purchase, our efforts were limited to organizational activities, completion of an initial public offering and the evaluation
of possible business combinations. On February 15, 2022, we consummated the Initial Public Offering of 7,500,000 units (the &#8220;Units&#8221;),
at $10.00 per Unit, generating proceeds of $75,000,000. Additionally, the underwriter fully exercised its option to purchase 1,125,000
additional Units, for which we received cash proceeds of $11,250,000. Simultaneously with the closing of the Initial Public Offering,
we consummated the sale of 505,000 private placement units at a price of $10.00 per unit generating proceeds of $5,050,000 in a private
placement to our Sponsor and EF Hutton (formerly Kingswood Capital Markets) (&#8220;EF Hutton&#8221;). On April 4, 2022, the Units separated
into Class A Common Stock and warrants, and ceased trading. On April 4, 2022, the Class A Common Stock and warrants commenced trading
on the NYSE American.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We identified Pogo as the
initial target for our initial business combination, and we closed on the acquisition of Pogo on November 15, 2023. While we were permitted
to pursue an acquisition opportunity in any industry or sector, we focused on assets used in exploring, developing, producing, transporting,
storing, gathering, processing, fractionating, refining, distributing or marketing of natural gas, natural gas liquids, crude oil or refined
products in North America.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On September 16, 2024, we
filed a Certificate of Amendment to our Amended and Restated Certificate of Incorporation with the Secretary of State of the State of
Delaware to change our name from &#8220;HNR Acquisition Corp&#8221; to &#8220;EON Resources Inc.&#8221;, effective at 11:59PM on September
17, 2024. Following the change of our name from HNR Acquisition Corp to EON Resources Inc., effective at the beginning of trading on September
18, 2024, our Class A Common Stock began trading on the NYSE American under the symbol &#8220;EONR&#8221; and our Public Warrants began
trading on the NYSE American under the symbol &#8220;EONR WS&#8221;. The CUSIP numbers for the Company&#8217;s Class A Common Stock and
Public Warrants did not change.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Purchase</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On December&#160;27, 2022,
we, entered into a Membership Interest Purchase Agreement (the &#8220;Original MIPA&#8221;) with CIC Pogo LP, a Delaware limited partnership
(&#8220;CIC&#8221;), DenCo Resources, LLC, a Texas limited liability company (&#8220;DenCo&#8221;), Pogo Resources Management, LLC, a
Texas limited liability company (&#8220;Pogo Management&#8221;), 4400 Holdings, LLC, a Texas limited liability company (&#8220;4400&#8221;
and, together with CIC, DenCo and Pogo Management, collectively, &#8220;Seller&#8221; and each a &#8220;Seller&#8221;), and, solely with
respect to Section&#160;7.20 of the Original MIPA, HNRAC Sponsors LLC, a Delaware limited liability company (&#8220;Sponsor&#8221;). On
August&#160;28, 2023, we, HNRA Upstream, LLC, a newly formed Delaware limited liability company which is managed by us, and is a subsidiary
of ours (&#8220;OpCo&#8221;), and HNRA Partner, Inc., a newly formed Delaware corporation and wholly owned subsidiary of ours (&#8220;SPAC
Subsidiary&#8221;, and together with us and OpCo, &#8220;Buyer&#8221; and each a &#8220;Buyer&#8221;), entered into an Amended and Restated
Membership Interest Purchase Agreement (the &#8220;A&amp;R MIPA&#8221;) with Seller, and, solely with respect to Section&#160;6.20 of
the A&amp;R MIPA, the Sponsor, which amended and restated the Original MIPA in its entirety (as amended and restated, the &#8220;MIPA&#8221;).
Our stockholders approved the transactions contemplated by the MIPA at a special meeting of stockholders that was originally convened
October 30, 2023, adjourned, and then reconvened on November 13, 2023 (the &#8220;Special Meeting&#8221;).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On November 15, 2023 (the
&#8220;Closing Date&#8221;), as contemplated by the MIPA:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
filed a Second Amended and Restated Certificate of Incorporation (the &#8220;Second A&amp;R Charter&#8221;) with the Secretary of State
of the State of Delaware, pursuant to which the number of authorized shares of our capital stock, par value $0.0001 per share, was increased
to 121,000,000 shares, consisting of (i) 100,000,000 shares of Class A Common Stock, (ii) 20,000,000 shares of Class B Common Stock,
and (iii) 1,000,000 shares of preferred stock, par value $0.0001 per share;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
shares of common stock were reclassified as Class A Common Stock; the Class B Common Stock has no economic rights but entitles its holder
to one vote on all matters to be voted on by stockholders generally; holders of shares of Class A Common Stock and shares of Class B
Common Stock will vote together as a single class on all matters presented to our stockholders for their vote or approval, except as
otherwise required by applicable law or by the Second A&amp;R Charter;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(A)
We contributed to OpCo (i) all of our assets (excluding our interests in OpCo and the aggregate amount of cash required to satisfy any
exercise by our stockholders of their Redemption Rights (as defined below)) and (ii) 2,000,000 newly issued shares of Class B Common
Stock (such shares, the &#8220;Seller Class B Shares&#8221;) and (B) in exchange therefor, OpCo issued to us a number of Class A common
units of OpCo (the &#8220;OpCo Class A Units&#8221;) equal to the number of total shares of Class A Common Stock issued and outstanding
immediately after the closing (the &#8220;Closing&#8221;) of the transactions contemplated by the MIPA (following the exercise by our
stockholders of their Redemption Rights) (such transactions, the &#8220;SPAC Contribution&#8221;); and</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Immediately
following the SPAC Contribution, OpCo contributed $900,000 to SPAC Subsidiary in exchange for 100% of the outstanding common stock of
SPAC Subsidiary (the &#8220;SPAC Subsidiary Contribution&#8221;);</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Immediately
following the SPAC Subsidiary Contribution, Seller sold, contributed, assigned, and conveyed to (A) OpCo, and OpCo acquired and accepted
from Seller, ninety-nine&#160;percent (99.0%) of the outstanding membership interests of Pogo Resources, LLC, a Texas limited liability
company (&#8220;Pogo&#8221; or the &#8220;Target&#8221;), and (B) SPAC Subsidiary, and SPAC Subsidiary purchased and accepted from Seller,
one percent (1.0%) of the outstanding membership interest of Target (together with the ninety-nine percent (99.0%) interest, the &#8220;Target
Interests&#8221;), in each case, in exchange for (x) $900,000 of the Cash Consideration (as defined below) in the case of SPAC Subsidiary
and (y) the remainder of the Aggregate Consideration (as defined below) in the case of OpCo (such transactions, together with the SPAC
Contribution and SPAC Subsidiary Contribution and the other transactions contemplated by the MIPA, the &#8220;Purchase&#8221;).</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The &#8220;Aggregate Consideration&#8221;
for the Target Interests was: (a) cash in the amount of $31,074,127 in immediately available funds (the &#8220;Cash Consideration&#8221;),
(b) 2,000,000 Class B common units of OpCo (&#8220;OpCo Class B Units&#8221;) valued at $10.00 per unit (the &#8220;Common Unit Consideration&#8221;),
which will be equal to and exchangeable into 2,000,000 shares of Class A Common Stock issuable upon exercise of the OpCo Exchange Right
(as defined below), as reflected in the amended and restated limited liability company agreement of OpCo that became effective at Closing
(the &#8220;A&amp;R OpCo LLC Agreement&#8221;), (c) the Seller Class B Shares, (d) $15,000,000 payable through a promissory note to Seller
(the &#8220;Seller Promissory Note&#8221;), (e) 1,500,000 preferred units (the &#8220;OpCo Preferred Units&#8221; and together with the
Opco Class A Units and the OpCo Class B Units, the &#8220;OpCo Units&#8221;) of OpCo (the &#8220;Preferred Unit Consideration&#8221;,
and, together with the Common Unit Consideration, the &#8220;Unit Consideration&#8221;), and (f) an agreement for Buyer, on or before
November 21, 2023, to settle and pay to Seller $1,925,873 from sales proceeds received from oil and gas production attributable to Pogo,
including pursuant to its third party contract with affiliates of Chevron. At Closing, 500,000 Seller Class B Shares (the &#8220;Escrowed
Share Consideration&#8221;) were placed in escrow for the benefit of Buyer pursuant to an escrow agreement and the indemnity provisions
in the MIPA. The Aggregate Consideration is subject to adjustment in accordance with the MIPA.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In connection with the Purchase,
holders of 3,323,707 shares of common stock sold in our initial public offering (the &#8220;public shares&#8221;) properly exercised their
right to have their public shares redeemed (the &#8220;Redemption Rights&#8221;) for a pro rata portion of the trust account (the &#8220;Trust
Account&#8221;) which held the proceeds from our initial public offering, funds from our payments to extend the time to consummate a business
combination and interest earned, calculated as of two business days prior to the Closing, which was approximately $10.95 per share, or
$49,362,479 in the aggregate. The remaining balance in the Trust Account (after giving effect to the Redemption Rights) was $12,979,300.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Immediately upon the Closing,
Pogo Royalty exercised the OpCo Exchange Right as it relates to 200,000 OpCo Class B units (and 200,000 shares of Class B Common Stock).
After giving effect to the Purchase, the redemption of public shares as described above and the exchange mentioned in the preceding sentence,
were (i) 5,097,009 shares of Class A Common Stock issued and outstanding, (ii) 1,800,000 shares of Class B Common Stock issued and outstanding
and (iii) no shares of preferred stock issued and outstanding.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;<b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>First Amendment to Amended and Restated Membership
Interest Purchase Agreement</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On November 15, 2023, Buyer,
Seller, and Sponsor entered into the MIPA Amendment, whereby the Parties agreed to extend the outside date for the transaction to November
30, 2023, and to place 500,000 shares of Seller Class B Shares into escrow instead of 500,000 OpCo Class B Units.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Settlement and Release Agreement </i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Effective June 20, 2024, the
Company and the Seller entered into a settlement agreement and release. Under the settlement agreement and release, and in settlement
of the working capital provisions of the Amended MIPA, the Seller agreed to waive all rights and claims to the amount of royalties payable
under the ORRI as of December 31, 2023, totaling $1,523,138 and agreed to pay certain amounts related to vendor payable claims assumed
by the Company at Closing.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Settle Up Letter Agreement</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On November 15, 2023, Buyer
and Seller entered into the Settle Up Letter Agreement, whereby Seller agreed to accept a minimum amount of cash at Closing less than
$33,000,000, provided that, on or before November 21, 2023, Buyer must settle and pay to Seller $1,925,873 from sales proceeds received
from oil and gas production attributable to Pogo, including pursuant to its third party contract with affiliates of Chevron. As of June
30, 2024, Buyer still owed $645,872.76 to Seller; however, Seller waived any continuing default under the terms of the MIPA based on lack
of payment, provided that such waiver is not a release of Buyer&#8217;s obligation to pay the amount in full.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>OpCo A&amp;R LLC Agreement</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In connection with the Closing,
we and Pogo Royalty, LLC, a Texas limited liability company, an affiliate of Seller and Seller&#8217;s designated recipient of the Aggregate
Consideration (&#8220;Pogo Royalty&#8221;), entered into an amended and restated limited liability company agreement of OpCo (the &#8220;OpCo
A&amp;R LLC Agreement&#8221;). Pursuant to the A&amp;R OpCo LLC Agreement, each OpCo unitholder (excluding us) will, subject to certain
timing procedures and other conditions set forth therein, have the right (the &#8220;OpCo Exchange Right&#8221;) to exchange all or a
portion of its OpCo Class&#160;B Units&#160;for, at OpCo&#8217;s election, (i)&#160;shares of Class&#160;A Common Stock at an exchange
ratio of one share of Class&#160;A Common Stock for each OpCo Class&#160;B Unit exchanged, subject to conversion rate adjustments for
stock splits, stock dividends and reclassifications and other similar transactions, or (ii)&#160;an equivalent amount of cash. Additionally,
the holders of OpCo Class&#160;B Units&#160;will be required to exchange all of their OpCo Class&#160;B Units&#160;(a &#8220;Mandatory
Exchange&#8221;) upon the occurrence of the following: (i)&#160;upon our direction, with the consent of at least fifty percent (50%) of
the holders of OpCo Class&#160;B Units; or (ii)&#160;upon the one-year&#160;anniversary of the Mandatory Conversion Trigger Date. In connection
with any exchange of OpCo Class&#160;B Units pursuant to the OpCo Exchange Right or acquisition of OpCo Class&#160;B Units&#160;pursuant
to a Mandatory Exchange, a corresponding number of shares of Class&#160;B Common Stock held by the relevant OpCo unitholder will be cancelled.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The OpCo Preferred Units&#160;will
be automatically converted into OpCo Class&#160;B Units&#160;on the two-year&#160;anniversary of the issuance date of such OpCo Preferred
Units&#160;(the &#8220;Mandatory Conversion Trigger Date&#8221;) at a rate determined by dividing (i)&#160;$20.00 per unit (the &#8220;Stated
Conversion Value&#8221;), by (ii)&#160;the Market Price of the Class&#160;A Common Stock (the &#8220;Conversion Price&#8221;). The &#8220;Market
Price&#8221; means the simple average of the daily VWAP of the Class&#160;A Common Stock during the five (5)&#160;trading days prior to
the date of conversion. On the Mandatory Conversion Trigger Date, we will issue a number of shares of Class&#160;B Common Stock to Pogo
Royalty equivalent to the number of OpCo Class&#160;B Units&#160;issued to Pogo Royalty. If not exchanged sooner, such newly issued OpCo
Class&#160;B Units&#160;shall automatically exchange into Class&#160;A Common Stock on the one-year&#160;anniversary of the Mandatory
Conversion Trigger Date at a ratio of one OpCo Class&#160;B Unit for one share of Class&#160;Common Stock. An equivalent number of shares
of Class&#160;B Common Stock must be surrendered with the OpCo Class&#160;B Units&#160;to us in exchange for the Class&#160;A Common Stock.
As noted above, the OpCo Class B Units must be exchanged upon the one-year&#160;anniversary of the Mandatory Conversion Trigger Date.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Promissory Note</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In connection with the Closing,
OpCo issued the Seller Promissory Note to Pogo Royalty in the principal amount of&#160;$15,000,000. The Seller Promissory Note provides
for a maturity date that is six (6)&#160;months from the Closing Date, bears an interest rate equal 12% per annum, and contains no penalty
for prepayment. If the Seller Promissory Note is not repaid in full on or prior to its stated maturity date, OpCo will owe interest from
and after default equal to the lesser of 18% per annum and the highest amount permissible under law, compounded monthly. The Seller Promissory
Note is subordinated to the Term Loan (as defined herein).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Registration Rights Agreement</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In connection with the Closing,
we and Pogo Royalty entered into a Registration Rights Agreement (the &#8220;Registration Rights Agreement&#8221;), pursuant to which
we agreed to provide Pogo Royalty with certain registration rights with respect to the shares of Class A Common Stock issuable upon exercise
of the OpCo Exchange Right, including filing with the SEC an initial registration statement on Form&#160;S-1&#160;covering the resale
by the Pogo Royalty of the shares of Class A Common Stock issuable upon exercise of the OpCo Exchange Right so as to permit their resale
under Rule&#160;415 under the Securities Act, no later than thirty (30)&#160;days following the Closing, use its commercially reasonable
efforts to have the initial registration statement declared effective by the SEC as soon as reasonably practicable following the filing
thereof with the SEC, and use commercially reasonable efforts to convert the Form&#160;S-1&#160;(and any subsequent registration statement)
to a shelf registration statement on Form&#160;S-3&#160;as promptly as practicable after we are is eligible to use a Form&#160;S-3&#160;Shelf.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In certain circumstances,
Pogo Royalty can demand our assistance with underwritten offerings, and Pogo Royalty will be entitled to certain piggyback registration
rights.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We filed a registration statement
on Form S-1 (File No. 333-275378) that became effective on August 9, 2024, which registered for resale up to Pogo Royalty&#8217;s shares
of Class A Common Stock and shares of Class A Common Stock underlying the Class B Common Stock.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Option Agreement</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In connection with the Closing,
we, HNRA Royalties, LLC, a Delaware limited liability company and wholly-owned subsidiary of ours (&#8220;HNRA Royalties&#8221;) and Pogo
Royalty entered into an Option Agreement (the &#8220;Option Agreement&#8221;). Pogo Royalty owns certain overriding royalty interests
in certain oil and gas assets owned by Pogo (the &#8220;ORR Interest&#8221;). Pursuant to the Option Agreement, Pogo Royalty granted irrevocable
and exclusive option to HNRA Royalties to purchase the ORR Interest for the Option Price (as defined below) at any time prior to November
15, 2024. The option is not exercisable while the Seller Promissory Note is outstanding.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The purchase price for the
ORR Interest upon exercise of the option is: (i)&#160;(1)&#160;$30,000,000 the (&#8220;Base Option Price&#8221;), plus (2)&#160;an additional
amount equal to annual interest on the Base Option Price of twelve percent (12%), compounded monthly, from the Closing Date through the
date of acquisition of the ORR Interest, minus (ii)&#160;any amounts received by Pogo Royalty in respect of the ORR Interest from the
month of production in which the effective date of the Option Agreement occurs through the date of the exercise of the option (such aggregate
purchase price, the &#8220;Option Price&#8221;).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Option Agreement and the
option will immediately terminate upon the earlier of (a)&#160;Pogo Royalty&#8217;s transfer or assignment of all of the ORR Interest
in accordance with the Option Agreement and (b)&#160;November 15, 2024.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the Option Agreement,
upon execution, we issued to Pogo Royalty 10,000 shares of Class A Common Stock.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Director Nomination and Board Observer Agreement</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In connection with the Closing,
we entered into Director Nomination and Board Observer Agreement (the &#8220;Board Designation Agreement&#8221;) with CIC. Pursuant to
the Board Designation Agreement, CIC has the right, at any time CIC beneficially owns our capital stock, to appoint two board observers
to attend all meetings of our Board of Directors. In addition, after the time of the conversion of the OpCo Preferred Units&#160;owned
by Pogo Royalty, CIC will have the right to nominate a certain number of members of the board of directors depending on Pogo Royalty&#8217;s
ownership percentage of Class A Common Stock as further provided in the Board Designation Agreement.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Backstop Agreement</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In connection with the Closing,
we entered a Backstop Agreement (the &#8220;Backstop Agreement&#8221;) with Pogo Royalty and certain of our founders listed therein (the
&#8220;Founders&#8221;) whereby Pogo Royalty will have the right (&#8220;Put Right&#8221;) to cause the Founders to purchase Pogo Royalty&#8217;s
OpCo Preferred Units&#160;at a purchase price per unit equal to $10.00 per unit plus the product of (i)&#160;the number of&#160;days elapsed
since the effective date of the Backstop Agreement and (ii)&#160;$10.00 divided by 730. Seller&#8217;s right to exercise the Put Right
will survive for six (6)&#160;months following the date the Trust Shares (as defined below) are not restricted from transfer under the
Letter Agreement (as defined in the MIPA) (the &#8220;Lockup Expiration Date&#8221;).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As security that the Founders
will be able to purchase the OpCo Preferred Units&#160;upon exercise of the Put Right, the Founders agreed to place at least 1,300,000&#160;shares
of Class&#160;A Common Stock into escrow (the &#8220;Trust Shares&#8221;), which the Founders can sell or borrow against to meet their
obligations upon exercise of the Put Right, with the prior consent of Seller. We are not obligated to purchase the OpCo Preferred Units&#160;from
Pogo Royalty under the Backstop Agreement. Until the Backstop Agreement is terminated, Pogo Royalty and its affiliates are not permitted
to engage in any transaction which is designed to sell short the Class&#160;A Common Stock or any of our other publicly traded securities.</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Founder Pledge Agreement&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In connection with the Closing,
we entered a Founder Pledge Agreement (the &#8220;<span style="text-decoration:underline">Founder Pledge Agreement</span>&#8221;) with the Founders whereby, in consideration
of placing the Trust Shares into escrow and entering into the Backstop Agreement, we agreed: (a) by January 15, 2024, to issue to the
Founders an aggregate number of newly issued shares of Class A Common Stock equal to 10% of the number of Trust Shares; (b) by January
15, 2024, to issue to the Founders a number of warrants to purchase an aggregate number of shares of Class A Common Stock equal to 10%
of the number of Trust Shares, which such warrants shall be exercisable for five years from issuance at an exercise price of $11.50 per
shares; (c) if the Backstop Agreement is not terminated prior to the Lockup Expiration Date, to issue an aggregate number of newly issued
shares of Class A Common Stock equal to (i) (A) the number of Trust Shares, <i>divided by </i>(B) the simple average of the daily VWAP
of the Class A Common Stock during the five (5) Trading Days prior to the date of the termination of the Backstop Agreement, subject to
a minimum of $6.50 per share, <i>multiplied by </i>(C) a price between $10.00-$13.00 per share (as further described in the Founder Pledge
Agreement), <i>minus </i>(ii) the number of Trust Shares; and (d) following the purchase of OpCo Preferred Units by a Founder pursuant
to the Put Right, to issue a number of newly issued shares of Class A Common Stock equal to the number of Trust Shares sold by such Founder.
Until the Founder Pledge Agreement is terminated, the Founders are not permitted to engage in any transaction which is designed to sell
short the Class&#160;A Common Stock or any of our other publicly traded securities.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Financing at Closing</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On November 2, 2023, we entered
into an agreement with (i) Meteora Capital Partners, LP (&#8220;MCP&#8221;), (ii) Meteora Select Trading Opportunities Master, LP (&#8220;MSTO&#8221;),
and (iii) Meteora Strategic Capital, LLC (&#8220;MSC&#8221; and, collectively with MCP and MSTO, &#8220;FPA Seller&#8221;) (the &#8220;Forward
Purchase Agreement&#8221;) for OTC Equity Prepaid Forward Transactions. For purposes of the Forward Purchase Agreement, we are referred
to as the &#8220;Counterparty&#8221;. Capitalized terms used herein but not otherwise defined shall have the meanings ascribed to such
terms in the Forward Purchase Agreement. The purpose of our entering into this agreement and these transactions was to provide a mechanism
whereby FPA Seller would purchase, and waive their redemption rights with respect to, a sufficient number of shares of our common stock
to enable us to have at least $5,000,000 of net tangible assets, a non-waivable condition to the Closing of the Purchase, to provide the
Company with cash to meet a portion of the transaction costs associated with the Purchase, and to provide the Company with a mechanism
to raise cash in the future at maturity. As of the date of this prospectus, however, the Company has not made any issuances, and has not
received any proceeds, from Meteora pursuant to the Forward Purchase Agreement, and the Company is actively pursuing a mutual recission
of the Forward Purchase Agreement.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Forward Purchase Agreement
provides for a prepayment shortfall in an amount in U.S. dollars equal to&#160;0.50% of the product of the Recycled Shares and the Initial
Price (defined below). FPA Seller in its sole discretion may sell Recycled Shares (i) at any time following November 2, 2023 (the &#8220;Trade
Date&#8221;) at prices greater than the Reset Price or (ii) commencing on the 180th day following the Trade Date at any sales price, in
either case without payment by FPA Seller of any Early Termination Obligation until such time as the proceeds from such sales equal&#160;100%
of the Prepayment Shortfall (as set forth under the section entitled &#8220;Shortfall Sales&#8221; in the Forward Purchase Agreement)
(such sales, &#8220;Shortfall Sales,&#8221; and such Shares, &#8220;Shortfall Sale Shares&#8221;). A sale of Shares is only (a) a &#8220;Shortfall
Sale,&#8221; subject to the terms and conditions herein applicable to Shortfall Sale Shares, when a Shortfall Sale Notice is delivered
under the Forward Purchase Agreement, and (b) an Optional Early Termination, subject to the terms and conditions of the Forward Purchase
Agreement applicable to Terminated Shares, when an OET Notice is delivered under the Forward Purchase Agreement, in each case the delivery
of such notice in the sole discretion of the FPA Seller (as further described in the &#8220;Optional Early Termination&#8221; and &#8220;Shortfall
Sales&#8221; sections in the Forward Purchase Agreement).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Following the Closing, the
reset price (the &#8220;Reset Price&#8221;) will be $10.00; provided that the Reset Price shall be reduced pursuant to a Dilutive Offering
Reset immediately upon the occurrence of such Dilutive Offering. The Purchased Amount subject to the Forward Purchase Agreement shall
be increased upon the occurrence of a Dilutive Offering Reset to that number of Shares equal to the quotient of (i) the Purchased Amount
divided by (ii) the quotient of (a) the price of such Dilutive Offering divided by (b) $10.00.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">From time to time and on any
date following the Trade Date (any such date, an &#8220;OET Date&#8221;) and subject to the terms and conditions in the Forward Purchase
Agreement, FPA Seller may, in its absolute discretion, terminate the Transaction in whole or in part by providing written notice to Counterparty
(the &#8220;OET Notice&#8221;), by the later of (a) the fifth Local Business Day following the OET Date and (b) no later than the next
Payment Date following the OET Date, (which shall specify the quantity by which the Number of Shares shall be reduced (such quantity,
the &#8220;Terminated Shares&#8221;)). The effect of an OET Notice shall be to reduce the Number of Shares by the number of Terminated
Shares specified in such OET Notice with effect as of the related OET Date. As of each OET Date, Counterparty shall be entitled to an
amount from FPA Seller, and the FPA Seller shall pay to Counterparty an amount, equal to the product of (x) the number of Terminated Shares
and (y) the Reset Price in respect of such OET Date. The payment date may be changed within a quarter at the mutual agreement of the parties.</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The &#8220;Valuation Date&#8221;
will be the earlier to occur of (a) the date that is three (3) years after the date of the closing of the Purchase &amp; Sale (the date
of the closing of the Purchase &amp; Sale, the &#8220;Closing Date&#8221;) pursuant to the A&amp;R MIPA, (b) the date specified by FPA
Seller in a written notice to be delivered to Counterparty at FPA Seller&#8217;s discretion (which Valuation Date shall not be earlier
than the day such notice is effective) after the occurrence of any of (w) a VWAP Trigger Event, (x) a Delisting Event, (y) a Registration
Failure or (z) unless otherwise specified therein, upon any Additional Termination Event, and (c) the date specified by FPA Seller in
a written notice to be delivered to Counterparty at FPA Seller&#8217;s sole discretion (which Valuation Date shall not be earlier than
the day such notice is effective). The Valuation Date notice will become effective immediately upon its delivery from FPA Seller to Counterparty
in accordance with the Forward Share Purchase Agreement.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On the &#8220;Cash Settlement
Payment Date,&#8221; which is the tenth Local Business Day immediately following the last day of the Valuation Period, the FPA Seller
will remit to the Counterparty an amount equal to the Settlement Amount and will not otherwise be required to return to the Counterparty
any of the Prepayment Amount and the Counterparty shall remit to the FPA Seller the Settlement Amount Adjustment; provided, that if the
Settlement Amount less the Settlement Amount Adjustment is a negative number and either clause (x) of Settlement Amount Adjustment applies
or the Counterparty has elected pursuant to clause (y) of Settlement Amount Adjustment to pay the Settlement Amount Adjustment in cash,
then neither the FPA Seller nor the Counterparty shall be liable to the other party for any payment under the Cash Settlement Payment
Date section of the Forward Purchase Agreement.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The FPA Seller agreed to waive
any redemption rights with respect to any Recycled Shares in connection with the Closing, as well as any redemption rights under the Company&#8217;s
certificate of incorporation that would require redemption by the Company.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The purpose of our entering
into this agreement and these transactions was to provide a mechanism whereby FPA Seller would purchase, and waive their redemption rights
with respect to, a sufficient number of shares of our common stock to enable us to have at least $5,000,000 of net tangible assets, a
non-waivable condition to the Closing of the Purchase, to provide the Company with cash to meet a portion of the transaction costs associated
with the Purchase, and to provide the Company with a mechanism to raise cash in the future at maturity. As of the date of this prospectus,
however, the Company has not made any issuances, and has not received any proceeds, from Meteora pursuant to the Forward Purchase Agreement,
and the Company is actively pursuing a mutual recission of the Forward Purchase Agreement.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the Forward Purchase
Agreement, the FPA Seller obtained&#160;50,070&#160;shares (&#8220;Recycled Shares&#8221;) and such purchase price of $545,356,&#160;or&#160;$10.95&#160;per
share,&#160;was funded by the use of our trust account proceeds as a partial prepayment (&#8220;Prepayment Amount&#8221;), and the FPA
Seller may purchase an additional&#160;504,425&#160;additional shares under the Forward Purchase Agreement, for the Forward Purchase Agreement
redemption&#160;3&#160;years from the date of the Acquisition (&#8220;Maturity Date&#8221;).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The FPA Seller received an
additional $1,004,736&#160;in cash from the Trust Account related to reimbursement for&#160;90,000&#160;shares of Class A Common stock
purchased by the FPA Seller in connection with the transactions at the redemption price of $10.95&#160;per share and transaction fees.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Maturity Date may be accelerated,
at the FPA Sellers&#8217; discretion, if the Company share price trades below $3.00&#160;per share for any&#160;10&#160;trading days during
a&#160;30-day consecutive trading-day period or the Company is delisted. The Company&#8217;s common stock traded below minimum trading
price during the period from November 15, 2023 to December 31, 2023, but no acceleration of the Maturity Date has been executed by the
FPA Seller to date.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>FPA Funding Amount PIPE Subscription Agreements</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On November 2, 2023, we entered
into a subscription agreement (the &#8220;FPA Funding Amount PIPE Subscription Agreement&#8221;) with FPA Seller.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the FPA Funding
PIPE Subscription Agreement, FPA Seller agreed to subscribe for and purchase, and we agreed to issue and sell to FPA Seller, on the Closing
Date, an aggregate of up to 3,000,000 our shares of Common Stock, less the Recycled Shares in connection with the Forward Purchase Agreement.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The fair value of the prepayment
was $14,257,648&#160;at inception of the agreement, $6,066,324&#160;as of the Closing date and was $6,067,094&#160;as of December 31,
2023, and is included as a reduction of additional paid-in capital on the consolidated statement of stockholders&#8217; equity. The estimated
fair value of the Maturity Consideration is $1,704,416. The Company recognized a gain from the change in fair value of the Forward Purchase
Agreement of $3,268,581&#160;during the period from November 15, 2023 to December 31, 2023.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Non-Redemption Agreement</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On November 13, 2023, we entered
into an agreement with (i) Meteora Capital Partners, LP (&#8220;MCP&#8221;), (ii) Meteora Select Trading Opportunities Master, LP (&#8220;MSTO&#8221;),
and (iii) Meteora Strategic Capital, LLC (&#8220;MSC&#8221; and, collectively with MCP and MSTO, &#8220;Backstop Investor&#8221;) (the
&#8220;Non-Redemption Agreement&#8221;) pursuant to which Backstop Investor agreed to reverse the redemption of up to the lesser of (i)
600,000 shares of Class A Common Stock, and (ii) such number of shares of Class A Common Stock such that the number of shares beneficially
owned by Backstop Investor and its affiliates and any other persons whose beneficial ownership of Class A Common Stock would be aggregated
with those of Backstop Investor for purposes of Section 13(d) of the Exchange Act, does not exceed 9.99% of the total number of issued
and outstanding shares of Common Stock (such number of shares, the &#8220;Backstop Investor Shares&#8221;).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Immediately upon consummation
of the closing of the transactions contemplated by the MIPA (the &#8220;Closing&#8221;), we paid Backstop Investor, in respect of the
Backstop Investor Shares, an amount in cash equal to (x) the Backstop Investor Shares, multiplied by (y) the Redemption Price (as defined
in our then-current amended and restated certificate of incorporation) minus $5.00, or $3,567,960. The Company paid the Backstop Investor
a total of $6,017,960 in cash related to the Non-Redemption Agreement from proceeds of the Trust Account.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Pogo Overview</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pogo is an exploration and
production company that began operations in February&#160;2017. Pogo is based in Dallas, Texas, and a field office in Loco Hills, New
Mexico. As of December&#160;31, 2023, Pogo&#8217;s operating focus is the Northwest Shelf of the Permian Basin, with a specific emphasis
on oil and gas producing properties located in the Grayburg-Jackson&#160;Field in Eddy County, New Mexico. Pogo is the Operator of Record
of its oil and gas properties, operating its properties through its wholly owned subsidiary, LH Operating LLC.&#160;Pogo completed multiple
acquisitions in 2018 and 2019. These acquisitions included multiple producing properties in Lea and Eddy counties, New Mexico.&#160;In
2020, after identifying its core development property, Pogo successfully completed a series of divestures of its non-core&#160;properties.
Then, with one key asset, its Grayburg-Jackson&#160;Field in Eddy County, New Mexico, Pogo focused all of its efforts on developing this
asset. This has been Pogo&#8217;s focus for 2022 and 2023. Currently, Pogo and EON combined have 15 employees (5 executive officers where
4 are in Houston and 1 in Lubbock; 10 field staff in Loco Hills). From time to time, on an as needed basis, contract workers handle additional
necessary responsibilities.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pogo owns, manages, and operates,
through its wholly owned subsidiary, LH Operating, LLC, 100% working interest in a gross 13,700 acres located on the Northwest Shelf of
the prolific oil and gas producing Permian Basin. Pogo benefits from cash flow growth through continued development of its working interest&#8217;s
ownership, with relatively low capital cost and lease operating expenses. As of December&#160;31, 2023, average net daily production associated
with Pogo&#8217;s working interests was 1,022 barrel of oil equivalent (&#8220;BOE&#8221;) per&#160;day consisting of 94% oil and 6% natural
gas. Pogo expects to continue to grow its cash flow by production enhancements in its operations on its gross 13,700-acre&#160;leasehold.
Furthermore, Pogo intends to make additional acquisitions within the Permian Basin, as well as other oil and gas producing regions in
the USA, that meet its investment criteria for minimum risk, geologic quality, operator capability, remaining growth potential, cash flow
generation and, most importantly, rate of return.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As of December&#160;31, 2023,
100% of Pogo&#8217;s gross 13,700 leasehold acres were located in Eddy County, New Mexico, where there 100% of the leasehold working interests
owned by Pogo consist of state and federal lands. Pogo believes the Permian Basin offers some of the most compelling rates of return for
Pogo and significant potential for cash flow growth. As a result of compelling rates of return, development activity in the Permian Basin
has outpaced all other onshore U.S.&#160;oil and gas basins since the end of 2016. This development activity has driven basin-level&#160;production
to grow faster than production in the rest of the United&#160;States.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pogo&#8217;s working interests
entitle it to receive an average of 97% of the net revenue from crude oil and natural gas produced from the oil and gas reservoirs underlying
its acreage. Pogo is not under any mandatory obligation to fund drilling and completion costs associated with oil and gas development
because 100% of its lease holdings are held by production. As a working interest owner with significant net earnings, Pogo seeks to fully
capture all remaining oil and gas reserves underlying its leasehold acres by systematically developing its low risk, predictable, proven
reserves by means of adding perforations in previously drilled and completed wells, were applicable, and drilling new wells in a predetermined
drilling pattern. Accordingly, Pogo&#8217;s development model generates strong margins greater than 60%, at low risk, predictable, production
outcomes that requires low overhead and is highly scalable. For the year ended December&#160;31, 2023, Pogo&#8217;s lifting cost was about
$27.21 per barrel of oil equivalent at a realized price of $72.69 per BOE, excluding the impact of settled commodity derivatives. Pogo
is led by a management team with extensive oil and gas engineering, geologic and land expertise, long-standing&#160;industry relationships
and a history of successfully managing a portfolio of working and leasehold interests, producing crude oil and natural gas assets. Pogo
intends to capitalize on its management team&#8217;s expertise and relationships to increase production and cash flow in the field.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Pogo Market Conditions</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The price that Pogo receives
for the oil and natural gas we produce is largely a function of market supply and demand. Because Pogo&#8217;s oil and gas revenues are
heavily weighted toward oil, Pogo is more significantly impacted by changes in oil prices than by changes in the price of natural gas.
World-wide&#160;supply in terms of output, especially production from properties within the United&#160;States, the production quota set
by OPEC, and the strength of the U.S.&#160;dollar can adversely impact oil prices.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Historically, commodity prices
have been volatile, and Pogo expects the volatility to continue in the future. Factors impacting the future oil supply balance are world-wide&#160;demand
for oil, as well as the growth in domestic oil production.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Pogo&#8217;s Key Producing Region</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As of December&#160;31, 2023,
all of Pogo&#8217;s properties were located exclusively within the Northwest Shelf of the Permian Basin. As of December&#160;2023, the
Permian Basin had the highest level of drilling activity in the United&#160;States with greater than 300 drilling rigs operating. By comparison,
The Eagle Ford Shale region located in Southwest-central&#160;Texas has less than 60 rigs operating. The Permian Basin includes three
major geologic provinces: the Delaware Basin to the west, the Midland Basin to the east and the Central Basin Platform in between. The
Northwest Shelf is the western limits of the Delaware Basin, a sub-basin&#160;within the Permian Basin complex. The Delaware Basin is
identified by an abundant amount of oil-in-place, stacked pay potential across an approximately 3,900-foot&#160;hydrocarbon column, attractive
well economics, favorable operating environment, well developed network of oilfield service providers, and significant midstream infrastructure
in place or actively under construction. One hundred percent (100%) of Pogo&#8217;s working interests are located as of December&#160;31,
2023, on the New Mexico side of the Delaware Basin. According to the USGS, the Delaware Basin contains the largest recoverable reserves
among all unconventional basins in the United&#160;States.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We believe the stacked-play
potential of the Delaware Basin combined with favorable drilling economics support continued production growth as Pogo develops its leasehold
position and improve well-spacing and completion techniques. Relative to other basins in the continental United States, Pogo believes
the Delaware Basin is in a mid-stage of well development and that per-well returns will improve as Pogo continues to employ enhanced oil
recovery technologies on its leasehold acreage. Pogo believes these enhanced oil recoveries will continue to support development activity
where it holds significant working interest, with predictable returns leading to increasing cash flows with low maintenance costs.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Pogo&#8217;s Working Interests in&#160;Grayburg-Jackson&#160;Field</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As of December&#160;31, 2023,
Pogo owns 100% working interest in 13,700 gross acres located in Eddy County, New Mexico, with a 74% weighted average net revenue. The
13,700 gross acres are strategically located in the prolific oil field, Grayburg-Jackson&#160;field. Working interests granted to the
Lessee (Pogo) under an Oil and Gas Lease are real property interests that grant ownership of the crude oil and natural gas underlying
a specific tract of land and the rights to explore for, drill for and produce crude oil and natural gas on that land or to lease those
exploration and development rights to a third party. Those rights to explore for, drill for and produce crude oil and natural gas on that
land have a set period of time for the working interest owner to exercise those rights. Typically, an Oil and Gas Lease can be automatically
extended beyond the initial lease term with continuous drilling, production or other operating activities or through negotiated contractual
lease extension options. Only when production and drilling cease, the lease terminates.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As of December&#160;31, 2023,
100% of Pogo&#8217;s working interests are held by production (&#8220;HBP&#8221;) meaning that Pogo is not under time sensitive obligation
to drill or work-over&#160;any wells on its 13,700 acres. As of December&#160;31, 2023, 100% of the wells and leases are operated by Pogo.
Pogo is the official Operator of record with the state and federal regulatory agencies. As of December&#160;31, 2023, Pogo generates a
substantial majority of its revenues and cash flows from its working interests when crude oil and natural gas are produced and sold from
its acreage.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Currently, Pogo&#8217;s working
interests reside entirely in the Northwest Shelf of the Permian Basin, which Pogo believes is one of the premier crude oil and natural
gas producing regions in the United&#160;States. As of December&#160;31, 2023, Pogo&#8217;s working interests covered 13,700 gross acres,
with the royalty owners retaining a weighted average 26% royalty. The following table summarizes Pogo&#8217;s working interest&#8217;s
position in the lands comprising its leasehold as of December&#160;31, 2023.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td colspan="33" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">LH Operating, LLC Northwest Shelf (Permian Basin) Leasehold</td></tr>
  <tr style="vertical-align: bottom">
    <td style="white-space: nowrap; font-weight: bold; border-bottom: Black 1.5pt solid">Date of Acquisition</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Gross<br/> Acres</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Federal<br/> Leases</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">State<br/> Leases</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Working<br/> Interest</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NRI<br/> (weighted <br/> avg.)<sup>(1)</sup></b></span></td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Royalty<br/> Interest<sup>(2)</sup></b></span></td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Operations</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">HBP</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 20%; text-align: left">2018</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 7%; text-align: right">13,700</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 7%; text-align: right">20</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 7%; text-align: right">3</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 7%; text-align: right">100</td><td style="width: 1%; text-align: left">%</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 7%; text-align: right">74</td><td style="width: 1%; text-align: left">%</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 7%; text-align: right">26</td><td style="width: 1%; text-align: left">%</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 7%; text-align: right">100</td><td style="width: 1%; text-align: left">%</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 7%; text-align: right">100</td><td style="width: 1%; text-align: left">%</td></tr>
  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 24pt; text-indent: -24pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0in"/><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(1)</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pogo&#8217;s
net revenue interests are based on its weighted average royalty interests across its entire leasehold</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0in"/><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(2)</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">No
unleased royalty interests as of December 31, 2023.</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 24pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As of December&#160;31, 2023,
Pogo has working interests in 342 shallow (above 4,000 ft), vertical wells producing oil and gas in paying quantities. Ninety-five&#160;of
the 342 producing wells were completed between 2019 and June&#160;2022 by Pogo. In 2019, Pogo initiated a 4-well&#160;pilot water injection
project into the Seven Rivers (&#8220;7R&#8221;) oil reservoir underlying its 13,700-acre&#160;leasehold. After an evaluation period extending
into early 2020, Pogo determined the pilot project was successful by producing oil in paying quantities by simply adding perforations
in the 7R reservoir in previously drilled and completed wells. Following the successful completion of the 4-well&#160;pilot project, Pogo
commenced a work-over&#160;program by adding perforations in the 7R reservoir in 91 previously drilled wells between 2019 and June&#160;2022.
Prior to initiating the 4-well&#160;pilot project the legacy wells were averaging 275 BOE/d. By December 2023, the total production increased
to 1,022 BOE/d. Pogo&#8217;s management team has determined, and verified by Cobb&#160;&amp; Associates, that 115 proved well patterns,
developed but non-producing, are scheduled to be brought into production between 2024 and 2027.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As of December&#160;31, 2023,
the estimated proved crude oil and natural gas reserves attributable to Pogo&#8217;s interests in its underlying acreage were 16,002 MBOE
(96% oil and 4% natural gas), based on a reserve report prepared by Cobb&#160;&amp; Associates, worldwide petroleum consultants. Of these
reserves, approximately 26% were classified as proved developed producing (&#8220;PDP&#8221;) reserves, 47% were classified as proved
developed non-producing&#160;(&#8220;PDNP&#8221;) reserves and 27% were classified as proved undeveloped (&#8220;PUD&#8221;) reserves.
PUD reserves included in these estimates relate solely to wells that are not yet drilled nor were not yet producing in paying quantities
as of December&#160;31, 2023. Estimated proved reserves included in this section is presented on an actual basis, without giving pro forma
effect to transactions completed after such dates.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 24pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pogo believes its production
and discretionary cash flows will grow significantly as Pogo completes its substantial PDNP inventory of 7R well patterns located on its
gross 13,700 acreage. As of December&#160;31, 2023, Pogo had production from 342 vertical wells, and it has identified 115 additional
PDNP well patterns based on its assessment of current geological, engineering and land data. As of December&#160;31, 2023, Pogo has identified
43 PUD well patterns based on its assessment of current geological, engineering and land data</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 24pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pogo&#8217;s working interest
development strategy anticipates shifting any drilling activity associated with its PUD reserves following Pogo&#8217;s completion of
its PDNP reserves. The work-over&#160;costs attributable to adding perforations in wells previously drilled and completed is significantly
less than drilling new wells. As of December&#160;31, 2023, Pogo&#8217;s leasehold position has 25.7 wells per square mile. Pogo expects
to see increases in its production, revenue and discretionary cash flows from the development of 115 well patterns in the 7R reservoir.
Pogo believes its current leasehold working interests provide the potential for significant long-term&#160;organic revenue growth as Pogo
develops its PDNP reserves to increase crude oil and natural gas production.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Pogo Business Strategies</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pogo&#8217;s primary business
objective is to generate discretionary cash flow by maintaining its strong cash flow from the PDP reserves and increasing cash flow by
developing predictable, low cost PDNP reserves in its Permian Basin asset. Pogo intends to accomplish this objective by executing the
following strategies:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b><i>Generate strong cash
flow supported by means of disciplined development of its PDNP Reserves.</i></b> As the sole working interest owner, Pogo benefits from
the continued organic development of its acreage in the Permian Basin. As of December&#160;31, 2023, Pogo, in conjunction with Cobb&#160;&amp;
Associates, a third-party&#160;engineering consulting firm, has confirmed that Pogo has 115, low cost, well patterns to be developed during
2024 to 2027. The total costs to complete these 115 well patterns have been predetermined by historical analysis. The estimated cost to
complete each PDNP pattern is $345,652 and the estimated cost to complete each PUD pattern is $1,187,698. A single well pattern consists
of one each producing well with its corresponding or dedicated water injection wells, with each injection well situated on four sides
of the producing well. Water injection wells are necessary to maintain reservoir pressure in its original state and to move the oil in
place toward the producing well. Pressure maintenance helps ensure maximum oil and gas recovery. Without pressure maintenance, oil recoveries
from a producing oil reservoir generally do not exceed 10% of the original oil in place (&#8220;OOIP&#8221;). With pressure maintenance
by re-injecting&#160;produced water into the oil reservoir, then Pogo expects to see ultimate oil recoveries 25% or greater of the OOIP.&#160;Offsetting
oil wells on its leasehold also take advantage of the water injected into the oil reservoir, and is able to convert a high percentage
of its revenue to discretionary cash flow. Because Pogo owns 100% working interests it incurs 100% of the monthly leasehold operating
costs for the production of crude oil and natural gas or capital costs for the drilling and completion of wells on its acreage. Because
these wells are shallow oil producers, with vertical depths between 1500 ft and 4000 ft, the monthly operating expenses are relatively
low.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b><i>Focus primarily on
the Permian Basin. </i></b>All of Pogo&#8217;s working interests are currently located in the Permian Basin, one of the most prolific
oil and gas basins in the United&#160;States. Pogo believes the Permian Basin provides an attractive combination of highly-economic&#160;and
oil-weighted&#160;geologic and reservoir properties, opportunities for development with significant inventory of drilling locations and
zo<span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">nes to be delineated our top-tier&#160;management team.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify">
<td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"/><td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Business
                                            Relations. </b>Leverage expertise and relationships to continue acquiring Permian Basin targets
                                            with high working interests in actively producing oil fields from top-tier&#160;E&amp;P operators,
                                            with predictable, stable cash flow, and with significant growth potential. Pogo has a history
                                            of evaluating, pursuing and consummating acquisitions of crude oil and natural gas targets
                                            in the Permian Basin and other oil producing basins. Pogo&#8217;s management team intends
                                            to continue to apply this experience in a disciplined manner when identifying and acquiring
                                            working interests. Pogo believes that the current market environment is favorable for oil
                                            and gas acquisitions in the Permian Basin and other oil generating basins. Numerous asset
                                            packages from sellers presents attractive opportunities for assets that meet Pogo&#8217;s
                                            target investment criteria. With sellers seeking to monetize their investments, Pogo intends
                                            to continue to acquire working interests that have substantial resource potential in the
                                            Permian Basin. Pogo expects to focus on acquisitions that complement its current footprint
                                            in the Permian Basin while targeting working interests underlying large scale, contiguous
                                            acreage positions that have a history of predictable, stable oil and gas production rates,
                                            and with attractive growth potential. Furthermore, Pogo seeks to maximize its return on capital
                                            by targeting acquisitions that meet the following criteria:</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify; text-indent: -24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify">
<td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"/><td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">sufficient
                                            visibility to production growth;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify; text-indent: -24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify">
<td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"/><td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">attractive
                                            economics;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify; text-indent: -24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify">
<td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"/><td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">de-risked&#160;geology
                                            supported by stable production;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify; text-indent: -24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify">
<td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"/><td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">targets
                                            from top-tier&#160;E&amp;P operators; and</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify; text-indent: -24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify">
<td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"/><td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">a
                                            geographic footprint that Pogo believes is complementary to its current Permian Basin asset
                                            and maximizes its potential for upside reserve and production growth.</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->65<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt"></p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b>Maintain conservative and
flexible capital structure to support Pogo&#8217;s business and facilitate&#160;long-term&#160;operations. </b>Pogo is committed to maintaining
a conservative capital structure that will afford it the financial flexibility to execute its business strategies on an ongoing basis.
Pogo believes that internally generated cash flows from its working interests and operations, available borrowing capacity under its revolving
credit facility, and access to capital markets will provide it with sufficient liquidity and financial flexibility to continue to acquire
attractive targets with high working interests that will position it to grow its cash flows in order to distributed to its shareholders
as dividends and/or reinvested to further expand its base of cash flow generating assets. Pogo intends to maintain a conservative leverage
profile and utilize a mix of cash flows from operations and issuance of debt and equity securities to finance future acquisitions.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Pogo Competitive Strengths</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pogo believes that the following
competitive strengths will allow it to successfully execute its business strategies and achieve its primary business objective:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -24pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Permian
Basin focused public company positioned as a preferred buyer in the basin. </i></b>Pogo believes that its focus on the Permian Basin
will position it as a preferred buyer of Permian Basin working interests in known producing oil and gas fields. As of December&#160;31,
2023, 100% of its current leasehold is located in an area with proven results from multiple stacked productive zones. Pogo&#8217;s properties
in the Permian Basin are high-quality, high-margin, and oil weighted, and Pogo believes they will be viewed favorably by the investment
community as compared to equity consideration diluted by lower quality assets located in less prolific basins. Pogo targets acquisitions
of operated properties with high working interest percentages that are relatively undeveloped in the Permian Basin, and it believes the
organic development of its acreage will result in substantial production growth regardless of acquisition activity.</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -24pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Favorable
and stable operating environment in the Permian Basin. </i></b>With over 400,000 wells drilled in the Permian Basin since 1900, the region
features a reliable and predictable geological and regulatory environment, according to Enverus. Pogo believes that the impact of new
technology, combined with the substantial geological information available about the Permian Basin, also reduces the risk of development
and exploration activities as compared to other, emerging hydrocarbon basins. As of December&#160;31, 2023, 100% of Pogo&#8217;s acreage
was located in New Mexico and does not require federal approval to develop its 115 well patterns classified as PDNP reserves and does
not have impediments in order to deliver Pogo&#8217;s production to market.</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -24pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Experienced
team with an extensive track record. </i></b>Pogo&#8217;s team has deep industry experience focused on development in the Permian Basin
as well as other significant oil producing regions and has a track record of identifying acquisition targets, negotiating agreements,
and successfully consummating acquisitions, and operating the acquired target using industry standards. Pogo plans to continue to evaluate
and pursue acquisitions of all sizes. Pogo expects to benefit from the industry relationships fostered by its management team&#8217;s
decades of experience in the oil and natural gas industry with a focus on the Permian Basin, in addition to leveraging its relationships
with many E&#160;&amp; P company executives.</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -24pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Development
potential of the properties underlying Pogo&#8217;s Permian Basin working interests. </i></b>Pogo&#8217;s assets consist of 100% working
interests in a gross 13,700 acres located in the Northwest Shelf of the Permian Basin. Pogo expects production from its working interest
ownership to increase its oil and gas production by 1,358 BOE/d as it develops its PDNP reserves after completing 115 well patterns.
Pogo believes its assets in the Permian Basin is in an earlier to mid-stage&#160;of development and that the average number of producing
wells per section in its 13,700-acre&#160;leasehold will increase as Pogo continues to add PUD well patterns, which would allow Pogo
to achieve higher realized cash flows to distributed to its shareholders as dividends and/or reinvested to further expand its base of
cash flow generating assets. Pogo believes that once it completes its PDNP and PUD program as detailed in the Cobb&#160;&amp; Associates
reserve report, Pogo expects its BOE/d will increase to 2,853 BOE/d combined with PDP.</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Pogo Crude Oil and Natural Gas Data</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In this prospectus, we include
estimates of reserves associated with the assets located in New Mexico as of December&#160;31, 2022, and December 31, 2023. Such reserve
estimates are based on evaluations prepared by the independent petroleum engineering firm of Cobb&#160;&amp; Associates, in accordance
with Standards Pertaining to the Estimating and Auditing of Oil and Gas Reserves Information promulgated by the Society of Petroleum Evaluation
Engineers and definitions and guidelines established by the SEC. We have included in this filing copies of the December 31, 2022 and December
31, 2023 reserve reports which exclude the 10% overriding royalty interest not acquired in the Purchase as Exhibits 99.1 and 99.3, respectively.
In addition, we have included a copy of the December 31, 2022 reserve report which includes the 10% overriding royalty interest not acquired
in the Purchase as Exhibit 99.2. As such, the estimates of proved oil and gas and discounted future net cash flows include the total interests
of Pogo Resources, LLC.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Cobb&#160;&amp; Associates
is an independent consulting firm founded in 1983. Its compensation is not contingent on the results obtained or reported. Frank J.&#160;Marek,
a Registered Texas Professional Engineer and a senior technical advisor of Cobb&#160;&amp; Associates, is primarily responsible for overseeing
the preparation of the reserve report. His professional qualifications meet or exceed the qualifications of reserve estimators set forth
in the &#8220;Standards Pertaining to Estimation and Auditing of Oil and Gas Reserves Information&#8221; promulgated by the Society of
Petroleum Engineers. His qualifications include: Bachelor of Science degree in Petroleum Engineering from Texas A&amp;M University 1977;
member of the Society of Petroleum Engineers; member of the Society of Petroleum Evaluation Engineers; and 40&#160;years of experience
in estimating and evaluating reserve information and estimating and evaluating reserves; he is proficient in judiciously applying industry
standard practices to engineering and geoscience evaluations as well as applying SEC and other industry reserve definitions and guidelines.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Preparation of Reserve Estimates</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pogo&#8217;s reserve estimates
as of December&#160;31, 2022 and December 31, 2023 included in this prospectus are based on evaluations prepared by the independent petroleum
engineering firm of Cobb&#160;&amp; Associates in accordance with Standards Pertaining to the Estimating and Auditing of Oil and Gas Reserves
Information promulgated by the Society of Petroleum Evaluation Engineers and definitions and guidelines established by the SEC. The December
31, 2023 reserve report excludes the 10% overriding royalty interest not acquired in the Purchase, and such report is included in this
filing as Exhibit 99.3. Unless expressly stated otherwise, when referencing the December 31, 2022 reserve report, we reference the reserve
report that includes the 10% overriding royalty interest not acquired in the Purchase because Pogo owned the entire interest at such time,
which such report is included in this filing as Exhibit 99.2. As such, the estimates of proved oil and gas and discounted future net cash
flows include the acquired interests of Pogo Resources, LLC as of December 31, 2023.&#160;Pogo selected Cobb&#160;&amp; Associates as
its independent reserve engineer for its historical experience and geographic expertise in engineering similar resources.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In accordance with rules and
regulations of the SEC applicable to companies involved in crude oil and natural gas producing activities, proved reserves are those quantities
of crude oil and natural gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be
economically producible from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and
government regulations. The term &#8220;reasonable certainty&#8221; means deterministically, the quantities of crude oil and/or natural
gas are much more likely to be achieved than not, and probabilistically, there should be at least a 90% probability of recovering volumes
equal to or exceeding the estimate. All of Pogo&#8217;s proved reserves were estimated using a deterministic method. The estimation of
reserves involves two distinct determinations. The first determination results in the estimation of the quantities of recoverable crude
oil and natural gas and the second determination results in the estimation of the uncertainty associated with those estimated quantities
in accordance with the definitions established under SEC rules. The process of estimating the quantities of recoverable reserves relies
on the use of certain generally accepted analytical procedures. These analytical procedures fall into four broad categories or methods:
(i)&#160;production performance-based methods, (ii)&#160;material balance-based methods; (iii)&#160;volumetric-based methods and (iv)&#160;analogy.
These methods may be used singularly or in combination by the reserve evaluator in the process of estimating the quantities of reserves.
Reserves for proved developed producing wells were estimated using production performance methods. Non-producing reserve estimates, for
developed and undeveloped properties, were forecast using a pattern simulation model.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">To estimate economically recoverable
proved reserves and related future net cash flows, Pogo considered many factors and assumptions, including the use of reservoir parameters
derived from geological and engineering data that cannot be measured directly, economic criteria based on current costs and the SEC pricing
requirements and forecasts of future production rates.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Under SEC rules, reasonable
certainty can be established using techniques that have been proven effective by actual production from projects in the same reservoir
or an analogous reservoir or by other evidence using reliable technology that establishes reasonable certainty. Reliable technology is
a grouping of one or more technologies (including computational methods) that have been field tested and have been demonstrated to provide
reasonably certain results with consistency and repeatability in the formation being evaluated or in an analogous formation. To establish
reasonable certainty with respect to Pogo&#8217;s estimated proved reserves, the technologies and economic data used in the estimation
of its proved reserves have been demonstrated to yield results with consistency and repeatability, and include production and well test
data, downhole completion information, geologic data, electrical logs, radioactivity logs, core data, and historical well cost and operating
expense data.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Pogo Internal Controls</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pogo&#8217;s internal staff
of petroleum engineers and geoscience professionals led by our VP of Operations, who is a petroleum engineer with more than 40 years of
relevant waterflood field, directly oversees the submissions and coordinates discussions with our independent reserve engineering firm.
The VP of Operations is supported by our Chief Executive Officer, who is a petroleum engineer with more than 40 years of experience, and
three consultants with engineering and geological degrees and experience. The VP of Operations works closely with our independent reserve
engineer to ensure the integrity, accuracy and timeliness of data furnished to such independent reserve engineer in their preparation
of reserve estimates. The accuracy of any reserve estimate is a function of the quality of available data and of engineering and geological
interpretation. As a result, the estimates of different engineers often vary. In addition, the results of drilling, testing and production
may justify revisions of such estimates. Accordingly, reserve estimates often differ from the quantities of oil and natural gas that are
ultimately recovered. See &#8220;<i>Risk Factors Related to Our Business</i>&#8221; appearing elsewhere in this prospectus. Pogo&#8217;s
engineering group is responsible for the internal review of reserve estimates.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">No portion of Pogo&#8217;s
engineering group&#8217;s compensation is directly dependent on the quantity of reserves booked. The engineering group reviews the estimates
with the third-party&#160;petroleum consultant, Cobb&#160;&amp; Associates, an independent petroleum engineering firm.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Pogo Reconciliation of Standardized Measure
to PV-10</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Neither PV-10 nor PV-10 after
ARO are financial measures defined under accounting principles generally accepted in the United States of America (&#8220;GAAP&#8221;);
therefore, the following table reconciles these amounts to the standardized measure of discounted future net cash flows, which is the
most directly comparable GAAP financial measure. Management believes that the non-GAAP financial measures of PV-10 and PV-10 after ARO
are relevant and useful for evaluating the relative monetary significance of oil and natural gas properties. PV-10 and PV-10 after ARO
are used internally when assessing the potential return on investment related to oil and natural gas properties and in evaluating acquisition
opportunities. Management believes that the presentation of PV-10 and PV-10 after ARO provide useful information to investors because
they are widely used by professional analysts and sophisticated investors in evaluating oil and natural gas companies. PV-10 and PV-10
after ARO are not measures of financial or operating performance under GAAP, nor are they intended to represent the current market value
of our estimated oil and natural gas reserves. PV-10 after ARO is equivalent to the standardized measure of discounted future net cash
flows as defined under GAAP. Investors should not assume that PV-10, or PV-10 after ARO, of our proved oil and natural gas reserves shown
above represent a current market value of our estimated oil and natural gas reserves.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The reconciliation of PV-10
and PV-10 after ARO to the standardized measure of discounted future net cash flows relating to our estimated proved oil and natural gas
reserves is as follows (in thousands):</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">December&#160;31,<br/> 2023</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">December&#160;31,<br/> 2022</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 76%; text-align: left; text-indent: -10pt; padding-left: 10pt">Present value of estimated future net revenues (PV-10)</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">281,018</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">519,775</td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -10pt; padding-left: 10pt">Present value of estimated ARO, discounted at 10%</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(173</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(228</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 4pt; text-indent: -10pt; padding-left: 10pt">Standardized measure</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">280,618</td><td style="padding-bottom: 4pt; text-align: left">&#160;</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">519,547</td><td style="padding-bottom: 4pt; text-align: left">&#160;</td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><!-- Field: Page; Sequence: 74; Value: 1 --><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Pogo Summary of Reserves</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following table presents
Pogo&#8217;s estimated proved reserves as of December&#160;31, 2023 and 2022. The following table is based off of the December&#160;31,
2023 reserve report, which excludes the 10% overriding royalty interest not acquired in the Purchase, and is included in this filing as
Exhibit 99.3. The following table is also based off of the December 31, 2022 reserve report, which includes the 10% overriding royalty
interest not acquired in the Purchase because Pogo owned the entire interest at such time, and such report is included in this filing
as Exhibit 99.2. As such, the estimates of proved oil and gas and discounted future net cash flows include the total interests of Pogo
Resources, LLC. The reserve estimates presented in the table below are based on reports prepared by Cobb&#160;&amp; Associates, Pogo&#8217;s
independent petroleum engineers, which reports were prepared in accordance with current SEC rules and regulations regarding oil and natural
gas reserve reporting:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
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    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>December&#160;31,<br/> 2022<sup>(2)</sup></b></span></td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">7,529</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">7,203</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">0</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">4,279</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">15,414</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">3,525</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">4,572</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">0</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">16,002</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 24pt; text-align: justify; text-indent: -24pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(1)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pogo&#8217;s estimated proved reserves were determined using average first-day-of-the-month prices for the prior 12&#160;months in accordance with SEC guidance. For crude oil volumes, the average WTI posted spot price of $78.22 per Bbl as of December&#160;31, 2023, was adjusted for quality, transportation fees and a regional price differential. For natural gas volumes, the average Henry Hub spot price of $2.64 per MMBtu as of December&#160;31, 2023, was adjusted for energy content, transportation fees and a regional price differential. The average adjusted product prices weighted by production over the remaining lives of the proved properties are $78.40 per Bbl of crude oil and $2.38 per Mcf of natural gas as of December&#160;31, 2023.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 24pt; text-align: justify; text-indent: -24pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(2)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pogo&#8217;s estimated proved reserves were determined using average first-day-of-the-month prices for the prior 12&#160;months in accordance with SEC guidance. For crude oil volumes, the average WTI posted spot price of $93.67 per Bbl as of December&#160;31, 2022, was adjusted for quality, transportation fees and a regional price differential. For natural gas volumes, the average Henry Hub spot price of $6.35 per MMBtu as of December&#160;31, 2022, was adjusted for energy content, transportation fees and a regional price differential. The average adjusted product prices weighted by production over the remaining lives of the proved properties are $94.53 per Bbl of crude oil and $4.14 per Mcf of natural gas as of December&#160;31, 2022.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 24pt; text-align: justify; text-indent: -24pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Reserve engineering is a process
of estimating volumes of economically recoverable crude oil and natural gas that cannot be measured in an exact manner. The accuracy of
any reserve estimate is a function of the quality of available data and of engineering and geological interpretation. As a result, the
estimates of different engineers often vary. In addition, the results of drilling, testing, and production may justify revisions of such
estimates. Accordingly, reserve estimates often differ from the quantities of crude oil and natural gas that are ultimately recovered.
Estimates of economically recoverable crude oil and natural gas and of future net revenues are based on a number of variables and assumptions,
all of which may vary from actual results, including geologic interpretation, prices, and future production rates and costs. Please read
&#8220;<i>Risk Factors Related to Our Business</i>.&#8221;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><!-- Field: Page; Sequence: 75; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->69<!-- Field: /Sequence --></p></div><div>
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    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Pogo PUDs</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As of December&#160;31, 2022,
Pogo estimated its PUD reserves to be 4,564 MBbls of crude oil and 1,000 MMcf of natural gas for a total of 4,730 MBOE.&#160;As of December
31, 2023, Pogo estimated its PUD reserves to be 4,137 MBbls of crude oil and 850 MMcf of natural gas for a total of 4,279 MBOE.&#160;PUDs
will be converted from undeveloped to developed as the applicable wells begin production.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following table summarizes
Pogo&#8217;s changes in PUD reserves during the year ended December&#160;31, 2022 (in MBOE):</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 88%; font-weight: bold; text-indent: -10pt; padding-left: 10pt">Balance, December&#160;31, 2021</td><td style="width: 1%">&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td style="text-indent: -10pt; padding-left: 10pt">Acquisitions of Reserves</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">0</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -10pt; padding-left: 10pt">Transfers to Estimated Proved Developed</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; ">
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  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following table summarizes
Pogo&#8217;s changes in PUD reserves during the year ended December 31, 2023 (in MBOE):</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -10pt; padding-left: 10pt">Transfers to Estimated Proved Developed</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; ">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Changes in Pogo&#8217;s PUD
reserves that occurred during the year ended December 31, 2022, and 2023 were primarily due to increased operating costs.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pogo has not made any capital
expenditures in order to convert its existing PUDs because Pogo has been allocating its capital resources to convert PDNP reserves to
PDP reserves and not to convert its PUD reserves to PDNP or PDP reserves.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pogo&#8217;s PUD reserves
at December 31, 2022 and 2023 are based on a development plan instituted by Pogo&#8217;s management. All of such reserves are scheduled
to be developed within five years from the date such locations were initially disclosed as PUD reserves. Our development plan is prepared
annually by management and approved by the Board of Directors. Our PUD reserves only represent reserves that are scheduled, based on such
plan, to be developed within five years from the date such locations were initially disclosed as PUDs. At December 31, 2023, Pogo estimates
that its future development costs relating to the development of PUD reserves are $0 in 2024, $13.5 million in 2025, $29.3 million in
2026 and $8.3 million in 2027. Under our development plan, our existing PUDs are expected to be converted to PDP reserves by 2027.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><!-- Field: Page; Sequence: 76; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->70<!-- Field: /Sequence --></p></div><div>
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    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Pogo Crude Oil and Natural Gas Production Prices and Costs</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>Production and Price History</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following table sets forth
information regarding net production of crude oil and natural gas and certain price and cost information for each of the periods indicated:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td style="font-weight: bold">Production data:</td><td>&#160;</td>
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    <td colspan="2" style="text-align: right">&#160;</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; text-indent: -10pt; padding-left: 10pt">Natural Gas (per Mcf)</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -10pt; padding-left: 10pt">NGLs (per Bbl)</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td style="font-weight: bold; text-indent: -10pt; padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Total (per BOE)<sup>(1)</sup></b></span></td><td style="font-weight: bold">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -10pt; padding-left: 10pt">Lease Operating Expenses</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">24.86</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">17.79</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; text-indent: -10pt; padding-left: 10pt">Production and ad valorem taxes</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">5.74</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">7.36</td><td style="text-align: left">&#160;</td></tr>
  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 24pt; text-indent: -24pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0in"/><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(1)</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8220;Btu-equivalent&#8221;
production volumes are presented on an oil-equivalent basis using a conversion factor of six Mcf of natural gas per Bbl of &#8220;oil
equivalent,&#8221; which is based on approximate energy equivalency and does not reflect the price or value relationship between crude
oil and natural gas.</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Productive Wells</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Productive wells located on
Pogo&#8217;s leasehold consist of producing vertical wells that are capable of producing oil and gas in paying quantities and are not
dry wells. As of December 31, 2023, Pogo owned working interests in 342 producing wells, 207 water injectors, and one water source well,
all located on its 13,700 gross acre leasehold. Only one well owned by Pogo is approved to be plugged and abandoned.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pogo is not aware of any dry
holes drilled on the acreage underlying its working interest during the relevant periods.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following table sets forth
the total number of gross and net productive wells, all of which are oil wells.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">As of December 31,<br/> 2023</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Gross</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 76%; text-indent: -10pt; padding-left: 10pt">Productive</td><td style="width: 1%">&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -10pt; padding-left: 10pt">Dry holes</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">&#8212;</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">&#8212;</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 4pt; text-indent: -10pt; padding-left: 10pt">Total</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; text-align: right">342</td><td style="padding-bottom: 4pt; text-align: left">&#160;</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; text-align: right">342</td><td style="padding-bottom: 4pt; text-align: left">&#160;</td></tr>
  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Drilling and other exploration and development
activities</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">For the years ended 2023 and
2022, Pogo did not drill any new wells.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As of December 31, 2023, there
were no wells being completed or waiting on completion. Furthermore, we were not installing any waterfloods or pressure maintenance systems
or engaging in any other development activity as of such date.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 77; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->71<!-- Field: /Sequence --></p></div><div>
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    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Acreage and Ownership</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following figures sets
forth information relating to Pogo&#8217;s acreage for its working interests as of December 31, 2023:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><img alt="" src="image_001.jpg"/></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pogo owns 100% working interests
that is subject to a 26% weighted average net royalty interest across its 13,700 gross acres as of December 31, 2023. For information
regarding the impact of lease expirations on our interests, please see &#8220;<i>Risks Related to Our Business</i>.&#8221; All of Pogo&#8217;s
13,700 acres are held by production and or not under any mandatory lease expiration.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pogo&#8217;s leasehold is
100% operated through its wholly owned subsidiary LH Operating and 100% of its 13,700 gross acre leasehold is HBP.&#160;The leasehold
is comprised of 23 total leases, 20 BLM and 3 NM State leases. Ninety-seven percent of its leasehold classified as PDP has title opinion
coverage. For regulatory purposes, the current producing reservoirs, 7R, Queen, Grayburg, and San Andres, are considered a single, unitized
pool (&#8220;pool&#8221;) for all current PDP reserves and PDNP reserves. No regulatory approval is required prior to performing workovers
on existing wells within the pool (i.e., perforations, fracking, or acidizing, etc.).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">LH Operating, LLC was created
to solely manage this asset on behalf of Pogo. LH Operating has performed its duties for two (2)&#160;years without any known liabilities,
and are in good standing with regulatory agencies. LH&#160;Operating is fully bonded to operate in New Mexico.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>Leasehold acreage</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following table sets forth
certain information regarding the total developed and undeveloped acreage in which Pogo owned an interest as of December 31, 2023.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">All leasehold acreage of Pogo
is considered to be &#8220;Developed Acres&#8221; because completed producing wells or wells capable of producing in economic quantities
are located throughout the entirety of the acreage such that the acreage allocated to such wells for production on a spacing, allocated,
unitized or pooled basis comprise the entire 13,700 acres leased by Pogo. The interests of Pogo in the oil, gas and other minerals in
&#8220;Developed Acres&#8221; are, or may be, composed of one or multiple stratigraphic zones producing or capable of producing oil and
gas in economic quantities.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The leasehold of Pogo has
undergone development activities, including drilling, completion, and production operations in the Grayburg/San Andres zones (&#8220;legacy
zones&#8221;) and/or the Seven Rivers waterflood zones. As a result, there are no remaining leasehold portions that require initial development.
Pogo has identified new potential proved undeveloped reserves within the incremental waterflood zone of the Seven Rivers. Pogo intends
to develop and produce the Seven Rivers zone comprised of approximately 1,677 acres underlying a portion of the Developed Acres including,
without limitation, infield drilling or perforation and recompletion of existing wells.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Pogo Regulation</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following disclosure describes
regulations directly associated with E&amp;P companies who are classified with state and federal regulatory agencies as Operator of record
of crude oil and natural gas properties, including Pogo.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Crude oil and natural gas
operations are subject to various types of legislation, regulation and other legal requirements enacted by governmental authorities. This
legislation and regulation affecting the crude oil and natural gas industry is under constant review for amendment or expansion. Some
of these requirements carry substantial penalties for failure to comply. The regulatory burden on the crude oil and natural gas industry
increases the cost of doing business.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>Environmental Matters</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Crude oil and natural gas
exploration, development and production operations are subject to stringent laws and regulations governing the discharge of materials
into the environment or otherwise relating to protection of the environment or occupational health and safety. These laws and regulations
have the potential to impact production on the properties in which Pogo owns working interest, which could materially adversely affect
its business and its prospects. Numerous federal, state and local governmental agencies, such as the EPA, issue regulations that often
require difficult and costly compliance measures that carry substantial administrative, civil and criminal penalties and may result in
injunctive obligations for non-compliance. These laws and regulations may require the acquisition of a permit before drilling commences,
restrict the types, quantities and concentrations of various substances that can be released into the environment in connection with drilling
and production activities, limit or prohibit construction or drilling activities on certain lands lying within wilderness, wetlands, ecologically
sensitive and other protected areas, require action to prevent or remediate pollution from current or former operations, such as plugging
abandoned wells or closing earthen pits, result in the suspension or revocation of necessary permits, licenses and authorizations, require
that additional pollution controls be installed and impose substantial liabilities for pollution resulting from operations. The strict,
joint and several liability nature of such laws and regulations could impose liability upon the Operator of record regardless of fault.
Moreover, it is not uncommon for neighboring landowners and other third parties to file claims for personal injury and property damage
allegedly caused by the release of hazardous substances, hydrocarbons or other waste products into the environment. Changes in environmental
laws and regulations occur frequently, and any changes that result in more stringent and costly pollution control or waste handling, storage,
transport, disposal or cleanup requirements could materially adversely affect Pogo&#8217;s business and prospects.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>Non-Hazardous&#160;and Hazardous Waste</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Resource Conservation
and Recovery Act (&#8220;RCRA&#8221;), and comparable state statutes and regulations promulgated thereunder, affect crude oil and natural
gas exploration, development, and production activities by imposing requirements regarding the generation, transportation, treatment,
storage, disposal and cleanup of hazardous and non-hazardous&#160;wastes. With federal approval, the individual states administer some
or all of the provisions of RCRA, sometimes in conjunction with their own, more stringent requirements. Administrative, civil and criminal
penalties can be imposed for failure to comply with waste handling requirements. Although most wastes associated with the exploration,
development and production of crude oil and natural gas are exempt from regulation as hazardous wastes under RCRA, these wastes typically
constitute nonhazardous solid wastes that are subject to less stringent requirements. From time to time, the EPA and state regulatory
agencies have considered the adoption of stricter disposal standards for nonhazardous wastes, including crude oil and natural gas wastes.
Moreover, it is possible that some wastes generated in connection with exploration and production of oil and gas that are currently classified
as nonhazardous may, in the future, be designated as &#8220;hazardous wastes,&#8221; resulting in the wastes being subject to more rigorous
and costly management and disposal requirements. On May&#160;4, 2016, a coalition of environmental groups filed a lawsuit against EPA
in the U.S.&#160;District Court for the District of Columbia for failing to update its RCRA Subtitle D criteria regulations governing
the disposal of certain crude oil and natural gas drilling wastes. In December&#160;2016, EPA and the environmental groups entered into
a consent decree to address EPA&#8217;s alleged failure. In response to the consent decree, in April&#160;2019, the EPA signed a determination
that revision of the regulations is not necessary at this time. However, any changes in the laws and regulations could have a material
adverse effect on the Operator of record (Pogo) of its properties&#8217; capital expenditures and operating expenses, which in turn could
affect production from the acreage underlying Pogo&#8217;s working interests and adversely affect Pogo&#8217;s business and prospects.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>Remediation</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Comprehensive Environmental
Response, Compensation, and Liability Act (&#8220;CERCLA&#8221;) and analogous state laws generally impose strict, joint and several liability,
without regard to fault or legality of the original conduct, on classes of persons who are considered to be responsible for the release
of a &#8220;hazardous substance&#8221; into the environment. These persons include the current owner or operator of a contaminated facility,
a former owner or operator of the facility at the time of contamination, and those persons that disposed or arranged for the disposal
of the hazardous substance at the facility. Under CERCLA and comparable state statutes, persons deemed &#8220;responsible parties&#8221;
may be subject to strict, joint and several liability for the costs of removing or remediating previously disposed wastes (including wastes
disposed of or released by prior owners or operators) or property contamination (including groundwater contamination), for damages to
natural resources and for the costs of certain health studies. In addition, it is not uncommon for neighboring landowners and other third
parties to file claims for personal injury and property damage allegedly caused by the hazardous substances released into the environment.
In addition, the risk of accidental spills or releases could expose Pogo&#8217;s working interests underlying its leasehold acreage to
significant liabilities that could have a material adverse effect on the operators&#8217; businesses, financial condition and results
of operations. Liability for any contamination under these laws could require Pogo to make significant expenditures to investigate and
remediate such contamination or attain and maintain compliance with such laws and may otherwise have a material adverse effect on their
results of operations, competitive position or financial condition.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>Water Discharges</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Clean Water Act (&#8220;CWA&#8221;),
the SDWA, the Oil Pollution Act&#160;of&#160;1990 (&#8220;OPA&#8221;), and analogous state laws and regulations promulgated thereunder
impose restrictions and strict controls regarding the unauthorized discharge of pollutants, including produced waters and other crude
oil and natural gas wastes, into regulated waters. The definition of regulated waters has been the subject of significant controversy
in recent&#160;years. The EPA and U.S. Army Corps of Engineers published a revised definition on January&#160;18, 2023, which has been
challenged in court. To the extent any future rule expands the scope of jurisdiction, it may impose greater compliance costs or operational
requirements on Pogo as the Operator of record. The discharge of pollutants into regulated waters is prohibited, except in accordance
with the terms of a permit issued by the EPA or the state. The CWA and regulations implemented thereunder also prohibit the discharge
of dredge and fill material into regulated waters, including jurisdictional wetlands, unless authorized by an appropriately issued permit.
In addition, spill prevention, control and countermeasure plan requirements under federal law require appropriate containment berms and
similar structures to help prevent the contamination of navigable waters in the event of a petroleum hydrocarbon tank spill, rupture or
leak. Production EPA has also adopted regulations requiring certain crude oil and natural gas facilities to obtain individual permits
or coverage under general permits for storm water discharges, and in June&#160;2016, the EPA finalized effluent limitation guidelines
for the discharge of wastewater from hydraulic fracturing.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The OPA is the primary federal
law for crude oil spill liability. The OPA contains numerous requirements relating to the prevention of and response to petroleum releases
into regulated waters, including the requirement that operators of offshore facilities and certain onshore facilities near or crossing
waterways must develop and maintain facility response contingency plans and maintain certain significant levels of financial assurance
to cover potential environmental cleanup and restoration costs. The OPA subject&#8217;s owners of facilities to strict, joint and several
liability for all containment and cleanup costs and certain other damages arising from a release, including, but not limited to, the costs
of responding to a release of crude oil into surface waters.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Noncompliance with the CWA,
the SDWA, or the OPA may result in substantial administrative, civil and criminal penalties, as well as injunctive obligations, for the
Operator of record (Pogo) underlying its leasehold working interest.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Air Emissions</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The CAA, and comparable state
laws and regulations, regulate emissions of various air pollutants through the issuance of permits and the imposition of other requirements.
The EPA has developed, and continues to develop, stringent regulations governing emissions of air pollutants at specified sources. New
facilities may be required to obtain permits before work can begin, and existing facilities may be required to obtain additional permits
and incur capital costs in order to remain in compliance. For example, in June&#160;2016, the EPA established criteria for aggregating
multiple small surface sites into a single source for air quality permitting purposes, which could cause small facilities, on an aggregate
basis, to be deemed a major source subject to more stringent air permitting processes and requirements. These laws and regulations may
increase the costs of compliance for crude oil and natural gas producers and impact production of the acreage underlying Pogo&#8217;s
working interests. In addition, federal and state regulatory agencies can impose administrative, civil and criminal penalties for non-compliance&#160;with
air permits or other requirements of the federal CAA and associated state laws and regulations. Moreover, obtaining or renewing permits
has the potential to delay the development of crude oil and natural gas projects.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Climate Change</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Climate change continues to
attract considerable public and scientific attention. As a result, numerous proposals have been made and are likely to continue to be
made at the international, national, regional and state levels of government to monitor and limit emissions of carbon dioxide, methane
and other GHGs. These efforts have included consideration of cap-and-trade&#160;programs, carbon taxes, GHG reporting and tracking programs
and regulations that directly limit GHG emissions from certain sources.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In the United&#160;States,
no comprehensive climate change legislation has been implemented at the federal level. However, President Biden has highlighted addressing
climate change as a priority of his administration and has issued several executive orders addressing climate change. Moreover, following
the U.S.&#160;Supreme Court finding that GHG emissions constitute a pollutant under the CAA, the EPA has adopted regulations that, among
other things, establish construction and operating permit reviews for GHG emissions from certain large stationary sources, require the
monitoring and annual reporting of GHG emissions from certain petroleum and natural gas system sources in the United&#160;States, and
together with the DOT, implementing GHG emissions limits on vehicles manufactured for operation in the United&#160;States. The regulation
of methane from oil and gas facilities has been subject to uncertainty in recent&#160;years. In September&#160;2020, the Trump Administration
revised regulations initially promulgated in June&#160;2016 to rescind certain methane standards and remove the transmission and storage
segments from the source category for certain regulations. However, subsequently, the U.S.&#160;Congress approved, and President Biden
signed into law, a resolution under the Congressional Review Act to repeal the September&#160;2020 revisions to the methane standards,
effectively reinstating the prior standards. Additionally, in November&#160;2021, the EPA issued a proposed rule that, if finalized, would
establish new source and first-time&#160;existing source standards of performance for methane and volatile organic compound emissions
for oil and gas facilities. Operators of affected facilities will have to comply with specific standards of performance to include leak
detection using optical gas imaging and subsequent repair requirement, and reduction of emissions by 95% through capture and control systems.
The EPA issued supplemental rules regarding methane emissions on December&#160;6, 2022. The IRA established the Methane Emissions Reduction
Program, which imposes a charge on methane emissions from certain petroleum and natural gas facilities, which may apply to our operations
in the future and may require us to expend material sums. We cannot predict the scope of any final methane regulatory requirements or
the cost to comply with such requirements. However, given the long-term&#160;trend toward increasing regulation, future federal GHG regulations
of the oil and gas industry remain a significant possibility.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Separately, various states
and groups of states have adopted or are considering adopting legislation, regulation or other regulatory initiatives that are focused
on such areas as GHG cap and trade programs, carbon taxes, reporting and tracking programs, and restriction of emissions. For example,
New Mexico has adopted regulations to restrict the venting or flaring of methane from both upstream and midstream operations. At the international
level, the United Nations-sponsored&#160;&#8220;Paris Agreement&#8221; requires member states to submit non-binding, individually-determined&#160;reduction
goals known as Nationally Determined Contributions every five&#160;years after 2020. President Biden has recommitted the United&#160;States
to the Paris Agreement and, in April&#160;2021, announced a goal of reducing the United&#160;States&#8217; emissions by&#160;50-52% below
2005 levels by 2030. Additionally, at COP26 in Glasgow in November&#160;2021, the United&#160;States and the European Union jointly announced
the launch of a Global Methane Pledge, an initiative committing to a collective goal of reducing global methane emissions by at least
30&#160;percent from 2020 levels by 2030, including &#8220;all feasible reductions&#8221; in the energy sector. The full impact of these
actions cannot be predicted at this time.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Governmental, scientific,
and public concern over the threat of climate change arising from GHG emissions has resulted in increasing political risks in the United&#160;States,
including climate change related pledges made by certain candidates now in public office. On January&#160;27, 2021, President Biden issued
an Executive Order that calls for substantial action on climate change, including, among other things, the increased use of zero-emission&#160;vehicles
by the federal government, the elimination of subsidies provided to the fossil fuel industry, and increased emphasis on climate-related&#160;risks
across government agencies and economic sectors. The Biden Administration has also called for restrictions on leasing on federal land,
including the Department of the Interior&#8217;s publication of a report recommending various changes to the federal leasing program,
though many such changes would require Congressional action. Substantially all of Pogo&#8217;s interests are located on state and federal,
and it cannot predict the full impact of these developments or whether the Biden Administration may pursue further restrictions. Other
actions that could be pursued by the Biden Administration may include the imposition of more restrictive requirements for the establishment
of pipeline infrastructure or the permitting of LNG export facilities, as well as more restrictive GHG emission limitations for oil and
gas facilities. Litigation risks are also increasing as a number of entities have sought to bring suit against various oil and natural
gas companies in state or federal court, alleging among other things that such companies created public nuisances by producing fuels that
contributed to climate change or alleging that the companies have been aware of the adverse effects of climate change for some time but
defrauded their investors or customers by failing to adequately disclose those impacts.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">There are also increasing
financial risks for fossil fuel producers as shareholders currently invested in fossil-fuel&#160;energy companies may elect in the future
to shift some or all of their investments into non-fossil&#160;fuel related sectors. Institutional lenders who provide financing to fossil
fuel energy companies also have become more attentive to sustainable lending practices and some of them may elect not to provide funding
for fossil fuel energy companies. For example, at COP26, GFANZ announced that commitments from over 450 firms across 45 countries had
resulted in over $130&#160;trillion in capital committed to net zero goals. The various sub-alliances&#160;of GFANZ generally require
participants to set short-term, sector-specific&#160;targets to transition their financing, investing, and/or underwriting activities
to net zero emissions by 2050. There is also a risk that financial institutions will be required to adopt policies that have the effect
of reducing the funding provided to the fossil fuel sector. In late 2021, the Federal Reserve announced that it had joined the Network
for Greening the Financial System, a consortium of financial regulators focused on addressing climate-related&#160;risks in the financial
sector. Subsequently, in November&#160;2021, the Federal Reserve issued a statement in support of the efforts of the Network for Greening
the Financial System to identify key issues and potential solutions for the climate-related&#160;challenges most relevant to central banks
and supervisory authorities. Limitation of investments in and financing for fossil fuel energy companies could result in the restriction,
delay or cancellation of drilling programs or development or production activities. Additionally, the SEC announced its intention to promulgate
rules requiring climate disclosures. Although the form and substance of these requirements is not yet known, this may result in additional
costs to comply with any such disclosure requirements.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The adoption and implementation
of new or more stringent international, federal or state legislation, regulations or other regulatory initiatives that impose more stringent
standards for GHG emissions from the oil and natural gas sector or otherwise restrict the areas in which this sector may produce oil and
natural gas or generate the GHG emissions could result in increased costs of compliance or costs of consuming, and thereby reduce demand
for oil and natural gas, which could reduce the profitability of Pogo&#8217;s working interests. Additionally, political, litigation and
financial risks may result in Pogo restricting or cancelling production activities, incurring liability for infrastructure damages as
a result of climatic changes, or impairing their ability to continue to operate in an economic manner, which also could reduce the profitability
of Pogo&#8217;s working interests. One or more of these developments could have a material adverse effect on Pogo&#8217;s business, financial
condition and results of operation.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Climate change may also result
in various physical risks, such as the increased frequency or intensity of extreme weather events or changes in meteorological and hydrological
patterns, that could adversely impact our operations and Pogo&#8217;s supply chains. Such physical risks may result in damage to Pogo&#8217;s
facilities or otherwise adversely impact our operations, such as if they become subject to water use curtailments in response to drought,
or demand for their products, such as to the extent warmer winters reduce the demand for energy for heating purposes. Extreme weather
conditions can interfere with production and increase costs and damage resulting from extreme weather may not be fully insured. However,
at this time, Pogo is unable to determine the extent to which climate change may lead to increased storm or weather hazards affecting
its business.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>Regulation of Hydraulic Fracturing</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Hydraulic fracturing is an
important and common practice that is used to stimulate production of hydrocarbons from tight formations. The process involves the injection
of water, sand and chemicals under pressure into formations to fracture the surrounding rock and stimulate production. Hydraulic fracturing
operations have historically been overseen by state regulators as part of their crude oil and natural gas regulatory programs.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">However, several agencies
have asserted regulatory authority over certain aspects of the process. For example, in August&#160;2012, the EPA finalized regulations
under the federal CAA that establish new air emission controls for crude oil and natural gas production and natural gas processing operations.
Federal regulation of methane emissions from the oil and gas sector has been subject to substantial controversy in recent&#160;years.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, governments have
studied the environmental aspects of hydraulic fracturing practices. These studies, depending on their degree of pursuit and whether any
meaningful results are obtained, could spur initiatives to further regulate hydraulic fracturing under the SDWA or other regulatory authorities.
For example, in December&#160;2016, the EPA issued its final report on a study it had conducted over several&#160;years regarding the
effects of hydraulic fracturing on drinking water sources. The final report, concluded that &#8220;water cycle&#8221; activities associated
with hydraulic fracturing may impact drinking water under certain limited circumstances.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Several states have adopted,
or are considering adopting, regulations that could restrict or prohibit hydraulic fracturing in certain circumstances and/or require
the disclosure of the composition of hydraulic fracturing fluids. For example, the Railroad Commission of Texas has previously issued
a &#8220;well integrity rule,&#8221; which updates the requirements for drilling, putting pipe down, and cementing wells. The rule also
includes new testing and reporting requirements, such as: (i)&#160;the requirement to submit cementing reports after well completion or
after cessation of drilling, whichever is later; and (ii)&#160;the imposition of additional testing on wells less than 1,000 feet below
usable groundwater. The well integrity rule took effect in January&#160;2014. Local governments also may seek to adopt ordinances within
their jurisdictions regulating the time, place and manner of drilling activities in general or hydraulic fracturing activities in particular
or prohibit the performance of well drilling in general or hydraulic fracturing in particular.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">State and federal regulatory
agencies recently have focused on a possible connection between the hydraulic fracturing related activities, particularly the disposal
of produced water in underground injection wells, and the increased occurrence of seismic activity. When caused by human activity, such
events are called induced seismicity. In some instances, operators of injection wells in the vicinity of seismic events have been ordered
to reduce injection volumes or suspend operations. Some state regulatory agencies, including those in Colorado, Ohio, Oklahoma and Texas,
have modified their regulations to account for induced seismicity. For example, in October&#160;2014, the Railroad Commission published
a new rule governing permitting or re-permitting&#160;of disposal wells that would require, among other things, the submission of information
on seismic events occurring within a specified radius of the disposal well location, as well as logs, geologic cross sections and structure
maps relating to the disposal area in question. If the permittee or an applicant of a disposal well permit fails to demonstrate that the
produced water or other fluids are confined to the disposal zone or if scientific data indicates such a disposal well is likely to be
or determined to be contributing to seismic activity, then the agency may deny, modify, suspend or terminate the permit application or
existing operating permit for that well. The Railroad Commission of Texas has used this authority to deny permits for waste disposal wells.
In some instances, regulators may also order that disposal wells be shut in. In late 2021, the Railroad Commission of Texas issued a notice
to operators of disposal wells in the Midland area, to reduce saltwater disposal well actions and provide certain data to the commission.
Separately, in November&#160;2021, New Mexico implemented protocols requiring operators to take various actions within a specified proximity
of certain seismic activity, including a requirement to limit injection rates if a seismic event is of a certain magnitude. As a result
of these developments, Pogo as the Operator of record may be required to curtail operations or adjust development plans, which may adversely
impact Pogo&#8217;s business.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The USGS has identified six
states with the most significant hazards from induced seismicity, including New Mexico, Oklahoma and Texas. In addition, a number of lawsuits
have been filed, most recently in Oklahoma, alleging that disposal well operations have caused damage to neighboring properties or otherwise
violated state and federal rules regulating waste disposal. These developments could result in additional regulation and restrictions
on the use of injection wells and hydraulic fracturing. Such regulations and restrictions could cause delays and impose additional costs
and restrictions on Pogo&#8217;s properties and on their waste disposal activities.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If new laws or regulations
that significantly restrict hydraulic fracturing and related activities are adopted, such laws could make it more difficult or costly
to perform fracturing to stimulate production from tight formations. In addition, if hydraulic fracturing is further regulated at the
federal or state level, fracturing activities could become subject to additional permitting and financial assurance requirements, more
stringent construction specifications, increased monitoring, reporting and recordkeeping obligations, plugging and abandonment requirements
and also to attendant permitting delays and potential increases in costs. Such legislative changes could cause Pogo to incur substantial
compliance costs, and compliance or the consequences of any failure to comply could have a material adverse effect on Pogo&#8217;s financial
condition and results of operations. At this time, it is not possible to estimate the impact on Pogo&#8217;s business of newly enacted
or potential federal or state legislation governing hydraulic fracturing.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Endangered Species Act</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The ESA restricts activities
that may affect endangered and threatened species or their habitats. The designation of previously unidentified endangered or threatened
species could cause E&amp;P operators to incur additional costs or become subject to operating delays, restrictions or bans in the affected
areas. Recently, there have been renewed calls to review protections currently in place for the dunes sagebrush lizard, whose habitat
includes parts of the Permian Basin, and to reconsider listing the species under the ESA.&#160;For example, in October&#160;2019 environmental
groups filed a lawsuit against the FWS seeking to compel the agency to list the species under the ESA, and in July&#160;2020, FWS agreed
to initiate a 12-month&#160;review to determine whether listing the species was warranted, which determination remains outstanding. Additionally,
in June&#160;2021, the FWS proposed to list two distinct population sections of the Lesser Prairie Chicken, including one in portions
of the Permian Basin, under the ESA, which was finalized on November&#160;25, 2022.&#160;To the extent species are listed under the ESA
or similar state laws, or previously unprotected species are designated as threatened or endangered in areas where Pogo&#8217;s properties
are located, operations on those properties could incur increased costs arising from species protection measures and face delays or limitations
with respect to production activities thereon.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Employee Health and Safety</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Operations on Pogo&#8217;s
properties are subject to a number of federal and state laws and regulations, including the federal Occupational Safety and Health Act
(&#8220;OSHA&#8221;) and comparable state statutes, whose purpose is to protect the health and safety of workers. In addition, the OSHA
hazard communication standard, the EPA community right-to-know&#160;regulations under Title&#160;III of the federal Superfund Amendment
and Reauthorization Act, and comparable state statutes require that information be maintained concerning hazardous materials used or produced
in operations and that this information be provided to employees, state and local government authorities and citizens.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Other Regulation of the Crude Oil and Natural
Gas Industry</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The crude oil and natural
gas industry is extensively regulated by numerous federal, state and local authorities. Legislation affecting the crude oil and natural
gas industry is under constant review for amendment or expansion, frequently increasing the regulatory burden. Also, numerous departments
and agencies, both federal and state, are authorized by statute to issue rules and regulations that are binding on the crude oil and natural
gas industry and its individual members, some of which carry substantial penalties for failure to comply. Although the regulatory burden
on the crude oil and natural gas industry increases the cost of doing business, these burdens generally do not affect us any differently
or to any greater or lesser extent than they affect other companies in the industry with similar types, quantities and locations of production.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The availability, terms and
conditions and cost of transportation significantly affect sales of crude oil and natural gas. The interstate transportation of crude
oil and natural gas and the sale for resale of natural gas is subject to federal regulation, including regulation of the terms, conditions
and rates for interstate transportation, storage and various other matters, primarily by the Federal Energy Regulatory Commission (&#8220;FERC&#8221;).
Federal and state regulations govern the price and terms for access to crude oil and natural gas pipeline transportation. FERC&#8217;s
regulations for interstate crude oil and natural gas transmission in some circumstances may also affect the intrastate transportation
of crude oil and natural gas.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pogo cannot predict whether
new legislation to regulate crude oil and natural gas might be proposed, what proposals, if any, might actually be enacted by the U.S.&#160;Congress
or the various state legislatures, and what effect, if any, the proposals might have on its operations. Sales of crude oil and condensate
are not currently regulated and are made at market prices.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>Drilling and Production</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The operations on Pogo&#8217;s
properties are subject to various types of regulation at the federal, state and local level. These types of regulation include requiring
permits for the drilling of wells, drilling bonds and reports concerning operations. The state, and some counties and municipalities,
in which Pogo operates also regulate one or more of the following:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-indent: -24pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the
location of wells;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-indent: -24pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the
method of drilling and casing wells;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-indent: -24pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the
timing of construction or drilling activities, including seasonal wildlife closures;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-indent: -24pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the
rates of production or &#8220;allowables&#8221;;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-indent: -24pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the
surface use and restoration of properties upon which wells are drilled;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-indent: -24pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the
plugging and abandoning of wells;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-indent: -24pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">and
notice to, and consultation with, surface owners and other third parties.</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">State laws regulate the size
and shape of drilling and spacing units or proration units governing the pooling of crude oil and natural gas properties. Some states
allow forced pooling or integration of tracts to facilitate exploration while other states rely on voluntary pooling of lands and leases.
In some instances, forced pooling or unitization may be implemented by third parties and may reduce Pogo&#8217;s interest in the unitized
properties. In addition, state conservation laws establish maximum rates of production from crude oil and natural gas wells, generally
prohibit the venting or flaring of natural gas and impose requirements regarding the ratability of production. These laws and regulations
may limit the amount of crude oil and natural gas that the Pogo&#8217;s properties can produce from Pogo&#8217;s wells or limit the number
of wells or the locations at which can be drill. Moreover, each state generally imposes a production or severance tax with respect to
the production and sale of crude oil and natural gas within its jurisdiction. States do not regulate wellhead prices or engage in other
similar direct regulation, but Pogo cannot assure you that they will not do so in the future. The effect of such future regulations may
be to limit the amounts of crude oil and natural gas that may be produced from Pogo&#8217;s wells, negatively affect the economics of
production from these wells or to limit the number of locations operators can drill.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Federal, state and local regulations
provide detailed requirements for the abandonment of wells, closure or decommissioning of production facilities and pipelines and for
site restoration in areas where Pogo operates. The U.S.&#160;Army Corps of Engineers and many other state and local authorities also have
regulations for plugging and abandonment, decommissioning and site restoration. Although the U.S.&#160;Army Corps of Engineers does not
require bonds or other financial assurances, some state agencies and municipalities do have such requirements.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Natural Gas Sales and Transportation</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">FERC has jurisdiction over
the transportation and sale for resale of natural gas in interstate commerce by natural gas companies under the Natural Gas Act&#160;of&#160;1938
(&#8220;NGA&#8221;) and the Natural Gas Policy Act&#160;of&#160;1978. Since 1978, various federal laws have been enacted which have resulted
in the complete removal of all price and non-price&#160;controls for sales of domestic natural gas sold in &#8220;first sales.&#8221;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Under the Energy Policy Act&#160;of&#160;2005,
FERC has substantial enforcement authority to prohibit the manipulation of natural gas markets and enforce its rules and orders, including
the ability to assess substantial civil penalties. FERC also regulates interstate natural gas transportation rates and service conditions
and establishes the terms under which Pogo&#8217;s properties may use interstate natural gas pipeline capacity, as well as the revenues
received for release of natural gas pipeline capacity. Interstate pipeline companies are required to provide nondiscriminatory transportation
services to producers, marketers and other shippers, regardless of whether such shippers are affiliated with an interstate pipeline company.
FERC&#8217;s initiatives have led to the development of a competitive, open access market for natural gas purchases and sales that permits
all purchasers of natural gas to buy gas directly from third-party&#160;sellers other than pipelines.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Gathering service, which occurs
upstream of jurisdictional transmission services, is regulated by the states onshore and in state waters. Section&#160;1(b)&#160;of the
NGA exempts natural gas gathering facilities from regulation by FERC under the NGA.&#160;FERC has in the past reclassified certain jurisdictional
transmission facilities as non-jurisdictional&#160;gathering facilities, which may increase the operators&#8217; costs of transporting
gas to point-of-sale&#160;locations. This may, in turn, affect the costs of marketing natural gas that Pogo&#8217;s properties produce.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Historically, the natural
gas industry was more heavily regulated; therefore, Pogo cannot guarantee that the regulatory approach currently pursued by FERC and the
U.S.&#160;Congress will continue indefinitely into the future nor can Pogo determine what effect, if any, future regulatory changes might
have on its natural gas related activities.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>Crude Oil Sales and Transportation</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Crude oil sales are affected
by the availability, terms and cost of transportation. The transportation of crude oil in common carrier pipelines is also subject to
rate regulation. FERC regulates interstate crude oil pipeline transportation rates under the Interstate Commerce Act and intrastate crude
oil pipeline transportation rates are subject to regulation by state regulatory commissions. The basis for intrastate crude oil pipeline
regulation, and the degree of regulatory oversight and scrutiny given to intrastate crude oil pipeline rates, varies from state to state.
Insofar as effective interstate and intrastate rates are equally applicable to all comparable shippers, Pogo believes that the regulation
of crude oil transportation rates will not affect its operations in any materially different way than such regulation will affect the
operations of its competitors.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Further, interstate and intrastate
common carrier crude oil pipelines must provide service on a non-discriminatory&#160;basis. Under this open access standard, common carriers
must offer service to all similarly situated shippers requesting service on the same terms and under the same rates. When crude oil pipelines
operate at full capacity, access is governed by pro-rationing&#160;provisions set forth in the pipelines&#8217; published tariffs. Accordingly,
Pogo believes that access to crude oil pipeline transportation services of Pogo&#8217;s properties will not materially differ from Pogo&#8217;s
competitors&#8217; access to crude oil pipeline transportation services.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>State Regulation</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">New Mexico regulates the drilling
for, and the production, gathering and sale of, crude oil and natural gas, including imposing severance taxes and requirements for obtaining
drilling permits. New Mexico currently imposes a 3.75% severance tax on the market value of crude oil and natural gas production as well
as other production taxes for conservation, schools, ad valorem, and equipment. Combined, these taxes amount to&#160;8-9% tax on market
value of crude and natural gas production. States also regulate the method of developing new fields, the spacing and operation of wells
and the prevention of waste of crude oil and natural gas resources.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">States may regulate rates
of production and may establish maximum daily production allowables from crude oil and natural gas wells based on market demand or resource
conservation, or both. States do not regulate wellhead prices or engage in other similar direct economic regulation, but Pogo cannot assure
you that they will not do so in the future. Should direct economic regulation or regulation of wellhead prices by the states increase,
this could limit the amount of crude oil and natural gas that may be produced from wells on Pogo&#8217;s properties and the number of
wells or locations Pogo&#8217;s properties can drill.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The petroleum industry is
also subject to compliance with various other federal, state and local regulations and laws. Some of those laws relate to resource conservation
and equal employment opportunity. Pogo does not believe that compliance with these laws will have a material adverse effect on its business.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Pogo Title to Properties</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Prior to completing an acquisition
of a target or working interests, Pogo performs a title review on each tract to be acquired. Pogo&#8217;s title review is meant to confirm
the working interests owned by a prospective seller, the property&#8217;s lease status and royalty amount as well as encumbrances or other
related burdens. As a result, title examinations have been obtained on substantially all of Pogo&#8217;s properties.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition to Pogo&#8217;s
initial title work, Pogo often will conduct a thorough title examination prior to leasing any new acres, and/or drilling a well. Should
any further title work uncover any further title defects, Pogo will perform curative work with respect to such defects. Pogo generally
will not commence drilling operations on a property until any material title defects on such property have been cured.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pogo believes that the title
to its assets is satisfactory in all material respects. Although title to these properties is in some cases subject to encumbrances, such
as customary royalty interest generally retained in connection with the acquisition of crude oil and gas interests, non-participating&#160;royalty
interests and other burdens, easements, restrictions or minor encumbrances customary in the crude oil and natural gas industry, Pogo believes
that none of these encumbrances will materially detract from the value of these properties or from its interest in these properties.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Pogo Competition</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The crude oil and natural
gas business is highly competitive; Pogo primarily competes with companies for the acquisition of targets with high percentage of working
interests underlying crude oil and natural gas leases. Many of Pogo&#8217;s competitors not only own and acquire working interests but
also explore for and produce crude oil and natural gas and, in some cases, carry on midstream and refining operations and market petroleum
and other products on a regional, national or worldwide basis. By engaging in such other activities, Pogo&#8217;s competitors may be able
to develop or obtain information that is superior to the information that is available to us. In addition, certain of Pogo&#8217;s competitors
may possess financial or other resources substantially larger than Pogo possesses. Pogo&#8217;s ability to acquire additional working
interests and properties and to discover reserves in the future will be dependent upon its ability to evaluate and select suitable properties
and to consummate transactions in a highly competitive environment.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, crude oil and
natural gas products compete with other forms of energy available to customers, primarily based on price. These alternate forms of energy
include electricity, coal, and fuel oils. Changes in the availability or price of crude oil and natural gas or other forms of energy,
as well as business conditions, conservation, legislation, regulations, and the ability to convert to alternate fuels and other forms
of energy may affect the demand for crude oil and natural gas.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Pogo Seasonality of Business</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Weather conditions affect
the demand for, and prices of, natural gas and can also delay drilling activities, disrupting Pogo&#8217;s overall business plans. Additionally,
Pogo&#8217;s properties are located in areas adversely affected by seasonal weather conditions, primarily in the winter and spring. During
periods of heavy snow, ice or rain, Pogo may be unable to move their equipment between locations, thereby reducing its ability to operate
Pogo&#8217;s wells, reducing the amount of crude oil and natural gas produced from the wells on Pogo&#8217;s properties during such times.
Additionally, extended drought conditions in the areas in which Pogo&#8217;s properties are located could impact its ability to source
sufficient water or increase the cost for such water. Furthermore, demand for natural gas is typically higher during the winter, resulting
in higher natural gas prices for Pogo&#8217;s natural gas production during its first and fourth quarters. Certain natural gas users utilize
natural gas storage facilities and purchase some of their anticipated winter requirements during the summer, which can lessen seasonal
demand fluctuations. Seasonal weather conditions can limit drilling and producing activities and other crude oil and natural gas operations
in Pogo&#8217;s operating areas. Due to these seasonal fluctuations, Pogo&#8217;s results of operations for individual quarterly periods
may not be indicative of the results that it may realize on an annual basis.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Employees and Human Working Capital</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have salaried and regular
pay employees in the field as well as management at our corporate offices. As of December&#160;31, 2024, we employed seven full-time&#160;salaried
and regular pay field individuals under no ongoing employment contracts who provided direct support to Pogo&#8217;s operations. As of
December 31, 2024, we employed five full-time&#160;salaried employees at our corporate offices, all of which have ongoing employment contracts.
None of these employees are covered by collective bargaining agreements.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Human capital management is
critical to our ongoing business success, which requires investing in our people. Our aim is to create a highly engaged and motivated
workforce where employees are inspired by leadership, engaged in purpose-driven, meaningful work and have opportunities for growth and
development. We are an equal opportunity employer and we are fundamentally committed to creating and maintaining a work environment in
which employees are treated with respect and dignity. All human resources policies, practices and actions related to hiring, promotion,
compensation, benefits and termination are administered in accordance with the principles of equal employment opportunity and other legitimate
criteria without regard to race, color, religion, sex, sexual orientation, gender expression or identity, ethnicity, national origin,
ancestry, age, mental or physical disability, genetic information, any veteran status, any military status or application for military
service, or membership in any other category protected under applicable laws.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">An effective approach to human
capital management requires that we invest in talent, development, culture and employee engagement. We aim to create an environment where
our employees are encouraged to make positive contributions and fulfill their potential.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our Board of Directors is
also actively involved in reviewing and approving executive compensation, selections and succession plans so that we have leadership in
place with the requisite skills and experience to deliver results the right way.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Emerging Growth Company</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are an &#8220;emerging
growth company,&#8221; as defined in the JOBS Act. As such, we are eligible to take advantage of certain exemptions from various reporting
requirements that are applicable to other public companies that are not &#8220;emerging growth companies&#8221; including, but not limited
to, not being required to comply with the auditor attestation requirements of Section&#160;404 of the Sarbanes-Oxley&#160;Act, reduced
disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements
of holding a non-binding&#160;advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously
approved. If some investors find our securities less attractive as a result, there may be a less active trading market for our securities
and the prices of our securities may be more volatile.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, Section&#160;107
of the JOBS Act also provides that an &#8220;emerging growth company&#8221; can take advantage of the extended transition period provided
in Section&#160;7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an &#8220;emerging
growth company&#8221; can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.
We intend to take advantage of the benefits of this extended transition period. Accordingly, the information we provide to you may be
different than you might get from other public companies in which you hold securities.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We will remain an emerging
growth company until the earliest of (i)&#160;the last day of the fiscal year following the fifth anniversary of the closing of our Initial
Public Offering, or December 31, 2027, (ii)&#160;the last day of the fiscal year in which we have total annual gross revenue of at least
$1.07&#160;billion, (iii)&#160;the last day of the fiscal year in which we are deemed to be a &#8220;large accelerated filer&#8221; as
defined in Rule&#160;12b-2&#160;under the Securities Exchange Act of 1934, as amended (the &#8220;Exchange Act&#8221;), which would occur
if the market value of our common stock held by non-affiliates&#160;exceeded $700.0&#160;million as of the last business day of the second
fiscal quarter of such year or (iv)&#160;the date on which we have issued more than $1.00&#160;billion in non-convertible&#160;debt securities
during the prior three-year&#160;period.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Facilities</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We currently maintain our
executive offices at 3730 Kirby Drive, Suite 1200, Houston, Texas 77098. We recently leased a space at 10810 Old Katy Rd, Katy, TX 77494
just beyond the Houston city limits for our engineering and geological center. The cost for the two spaces combined are approximately
$3,000 per month. We consider our current office space adequate for our current operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Legal Proceedings</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">There is no material litigation,
arbitration or governmental proceeding currently pending against us or any members of our management team in their capacity as such.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Corporate Information</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Our executive offices are located at 3730 Kirby
Drive, Suite 1200, Houston, Texas 77098, and our telephone number is (713) 834-1145.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><div><a id="k_011"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="text-transform: uppercase"><b>Management&#8217;s
Discussion and Analysis of<br/>
Financial Condition and Results of Operations OF EON</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>References in this section
to &#8220;we,&#8221; &#8220;us&#8221;, &#8220;EON&#8221;, the &#8220;Successor&#8221; or the &#8220;Company&#8221; refer to EON Resources
Inc. (f/k/a HNR Acquisition Corp) (and the business of Pogo which became the business of the Company after giving effect to the Purchase).
References to our &#8220;management&#8221; or our &#8220;management team&#8221; refer to our officers and directors, and references to
the &#8220;Sponsor&#8221; refer to HNRAC Sponsors, LLC. &#8220;Predecessor&#8221; refers to the historical business of Pogo prior to the
Purchase on November 15, 2023. The following discussion and analysis of the Company&#8217;s financial condition and results of operations
should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this prospectus. Certain information
contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Special Note&#160;Regarding Forward-Looking
Statements</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>This prospectus includes
&#8220;forward-looking statements&#8221; within the meaning of Section&#160;27A of the Securities Act&#160;of&#160;1933 and Section&#160;21E
of the Exchange&#160;Act that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially
from those expected and projected. All statements, other than statements of historical fact included in this prospectus including, without
limitation, statements in this &#8220;Management&#8217;s Discussion and Analysis of Financial Condition and Results of Operations&#8221;
regarding the Company&#8217;s financial position, business strategy and the plans and objectives of management for future operations,
are forward-looking statements. Words such as &#8220;expect,&#8221; &#8220;believe,&#8221; &#8220;anticipate,&#8221; &#8220;intend,&#8221;
&#8220;estimate,&#8221; &#8220;seek&#8221; and variations and similar words and expressions are intended to identify such forward-looking
statements. Such forward-looking statements relate to future events or future performance, but reflect management&#8217;s current beliefs,
based on information currently available. A number of factors could cause actual events, performance or results to differ materially from
the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could
cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors section
of the Company&#8217;s Annual Report on Form&#160;10-K filed with the SEC.&#160;The Company&#8217;s securities filings can be accessed
on the EDGAR section of the SEC&#8217;s website at www.sec.gov. 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.</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Overview</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are an independent oil
and natural gas company based in Texas and formed in 2017 that is focused on the acquisition, development, exploration, production and
divestiture of oil and natural gas properties in the Permian Basin. The Permian Basin is located in west Texas and southeastern New Mexico
and is characterized by high oil and liquids-rich natural gas content, multiple vertical and horizontal target horizons, extensive production
histories, long-lived reserves and historically high drilling success rates. Pogo&#8217;s properties are in the Grayburg-Jackson Field
in Eddy County, New Mexico, which is a sub-area of the Permian Basin. Pogo focuses primarily on production through waterflooding recovery
methods.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt"></p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pogo is a limited liability
company and is not subject to federal and state income taxes. However, it must file informational tax returns and all taxable income or
loss flows through to the owners in their individual tax returns.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Company&#8217;s assets
as mentioned above consist of contiguous leasehold positions of approximately 13,700 gross (13,700 net) acres with an average working
interest of 100%. We operate 100% of the net acreage across the Company&#8217;s assets, all of which is net operated acreage of vertical
wells with average depths of approximately 3,810 feet.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our average daily production
for the nine months ended September 30, 2024 was 814 barrel of oil equivalent (&#8220;BOE&#8221;) per day. Our average daily production
for the year ended December 31, 2023, was 1,022 BOE per day. The decrease in production is due to an increase in well downtime, water
injection flowlines that needed repair or replacement, and the conveyance of the 10% Override royalty interest to Pogo Royalty.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Impact of Coronavirus (&#8220;COVID-19&#8221;)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The COVID-19 pandemic resulted
in a severe worldwide economic downturn, significantly disrupting the demand for oil throughout the world, and created significant volatility,
uncertainty and turmoil in the oil and gas industry. The decrease in demand for oil, combined with pressures on the global supply-demand
balance for oil and related products, resulted in oil prices declining significantly in late February 2020. Since mid-2020, oil prices
have improved, with demand steadily increasing despite the uncertainties surrounding the COVID-19 variants, which have continued to inhibit
a full global demand recovery. In addition, worldwide oil inventories are, from a historical perspective, very low and supply increases
from the Organization of the Petroleum Exporting Countries (&#8220;OPEC&#8221;), Russia and other oil producing nations are not expected
to be sufficient to meet forecasted oil demand growth in 2023, with many OPEC countries not able to produce at their OPEC agreed upon
quota levels due to their lack of capital investments over the past few years in developing incremental oil supplies.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Global oil price levels will
ultimately depend on various factors and consequences beyond the Company&#8217;s control, such as: (i) the effectiveness of responses
to combat the COVID-19 virus and their impact on domestic and worldwide demand, (ii) the ability of OPEC, Russia and other oil producing
nations to manage the global oil supply, (iii) the timing and supply impact of any Iranian sanction relief on Iran&#8217;s ability to
export oil, (iv) additional actions by businesses and governments in response to the pandemic, (v) the global supply chain constraints
associated with manufacturing delays, and (vi) political stability of oil consuming countries.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We continue to assess the
impact of the COVID-19 pandemic on our company and may modify our response as the impact of COVID-19 continues to evolve.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Certain prior year financial
statements are not comparable to our current year financial statements due to the adoption of fresh start accounting as a result of the
Acquisition. References to &#8220;Successor&#8221; relate to the financial position and results of operations of EON Resources Inc. subsequent
to November 15, 2023. References to &#8220;Predecessor&#8221; relate to the financial position and results of operations of EON Resources
Inc. prior to, and including, November 14, 2023.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Selected Factors That Affect Our Operating
Results</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our reven<span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ues,
cash flows from operations and future growth depend substantially upon:</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify">
<td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"/><td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the
                                            timing and success of production and development activities;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify">
<td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"/><td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the
                                            prices for oil and natural gas;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify">
<td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"/><td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the
                                            quantity of oil and natural gas production from our wells;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify">
<td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"/><td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">changes
                                            in the fair value of the derivative instruments we use to reduce our exposure to fluctuations
                                            in the price of oil and natural gas;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify">
<td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"/><td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">our
                                            ability to continue to identify and acquire high-quality acreage and development opportunities;
                                            and</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify">
<td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"/><td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the
                                            level of our operating expenses.</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt"></p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition to the factors
that affect companies in our industry generally, the location of substantially all of our acreage discussed above subjects our operating
results to factors specific to these regions. These factors include the potential adverse impact of weather on drilling, production and
transportation activities, particularly during the winter and spring months, as well as infrastructure limitations, transportation capacity,
regulatory matters and other factors that may specifically affect one or more of these regions.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The price at which our oil
and natural gas production are sold typically reflects either a premium or discount to the New York Mercantile Exchange (&#8220;NYMEX&#8221;)
benchmark price. Thus, our operating results are also affected by changes in the oil price differentials between the applicable benchmark
and the sales prices we receive for our oil production. Our oil price differential to the NYMEX benchmark price during the nine months
ended September 30, 2024 and 2023, was $(2.07) and $(3.22) per barrel, respectively. Our natural gas price differential during the nine
months ended September 30, 2024 and 2023, was $0.04 and $0.03 per one thousand cubic feet (&#8220;Mcf&#8221;), respectively. Fluctuations
in our price differentials and realizations are due to several factors such as gathering and transportation costs, takeaway capacity relative
to production levels, regional storage capacity, gain/loss on derivative contracts and seasonal refinery maintenance temporarily depressing
demand.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Market Conditions</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The price that we receive
for the oil and natural gas we produce is largely a function of market supply and demand. Because our oil and gas revenues are heavily
weighted toward oil, we are more significantly impacted by changes in oil prices than by changes in the price of natural gas. World-wide
supply in terms of output, especially production from properties within the United States, the production quota set by OPEC, and the strength
of the U.S. dollar can adversely impact oil prices.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Historically, commodity prices
have been volatile, and we expect the volatility to continue in the future. Factors impacting the future oil supply balance are world-wide
demand for oil, as well as the growth in domestic oil production.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Prices for various quantities
of natural gas and oil that we produce significantly impact our revenues and cash flows. The following table lists average NYMEX prices
for oil and natural gas for the three and nine months ended September 30, 2024 and 2023.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">For the three months ended <br/> September 30,</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2024</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2023</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Average NYMEX Prices <sup>(1)</sup></span></td><td>&#160;</td>
    <td colspan="2" style="text-align: right">&#160;</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: right">&#160;</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 76%; padding-left: 9pt">Oil (per Bbl)</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">76.24</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">82.30</td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-left: 9pt">Natural gas (per Mcf)</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">2.11</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">2.59</td><td style="text-align: left">&#160;</td></tr>
  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">For the nine months ended <br/> September 30,</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2024</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2023</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Average NYMEX Prices <sup>(1)</sup></span></td><td>&#160;</td>
    <td colspan="2" style="text-align: right">&#160;</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: right">&#160;</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 76%; padding-left: 9pt">Oil (per Bbl)</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">78.50</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">77.38</td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-left: 9pt">Natural gas (per Mcf)</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">2.11</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">2.47</td><td style="text-align: left">&#160;</td></tr>
  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(1)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Based on average NYMEX closing prices.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">For the nine months ended
September 30, 2024, the average NYMEX oil pricing was $78.50 per barrel of oil or 7% lower than the average NYMEX price per barrel for
the nine months ended September 30, 2023. Our settled derivatives decreased our realized oil price per barrel by $2.56 and $3.47 in the
nine months ended September 30, 2024, and 2023, respectively. Our average realized oil price per barrel after reflecting settled derivatives
and location differentials was $77.12 and $74.23 for the three months ended September 30, 2024 and 2023, respectively. Our average realized
oil price per barrel after reflecting settled derivatives and location differentials was $73.87 and $73.03 for the nine months ended September
30, 2024 and 2023, respectively.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The average NYMEX natural gas pricing for the
nine months ended September 30, 2024, was $2.11 per Mcf, or 14% lower than the average NYMEX price of $2.47 per Mcf for the nine months
ended September 30, 2023.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Pogo Royalty Overriding Royalty Interest Transaction</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Effective July 1, 2023, the
Predecessor transferred to Pogo Royalty, a related party to the Predecessor, an assigned and undivided overriding royalty interest (&#8220;ORRI&#8221;)
equal in amount to ten percent (10%) of the Company&#8217;s interest all oil, gas and minerals in, under and produced from each lease.
The consideration received for the 10% ORRI was $10. Thus, a loss of $816,011 was recorded as a result of the conveyance in the previous
year. Additionally, because of this transaction, our reserve balance was decreased as well our current net production volumes and revenues.</p><div>

</div><p style="margin: 0">&#160;</p><div>

</div><p style="margin: 0"></p><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->85<!-- Field: /Sequence --></p></div><div>
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</div><p style="margin: 0">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Three months ended September 30, 2024 (Successor)
Compared to Three months ended September 30, 2023 </i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following table sets forth selected operating
data for the periods indicated. Average sales prices are derived from accrued accounting data for the relevant period indicated.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Three<br/>
Months<br/> Ended<br/> <i>September&#160;</i>30,<br/> 2024</b></span></td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="border-left: Black 1.5pt solid; font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Three<br/> Months<br/> Ended<br/> <i>September</i> 30,<br/> 2023</b></span></td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-style: italic">&#160;</td>
    <td colspan="2" style="font-style: italic; text-align: center">Successor</td><td style="font-style: italic">&#160;</td><td style="border-left: Black 1.5pt solid; font-style: italic">&#160;</td>
    <td colspan="2" style="font-style: italic; text-align: center">Predecessor</td><td style="font-style: italic">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="font-weight: bold">Revenues</td><td>&#160;</td>
    <td colspan="2" style="text-align: right">&#160;</td><td>&#160;</td><td style="border-left: Black 1.5pt solid">&#160;</td>
    <td colspan="2" style="text-align: right">&#160;</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">&#160;&#160;&#160;&#160;&#160;&#160;5,275,254</td><td style="width: 1%; text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid; width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;6,314,104</td><td style="width: 1%; text-align: left">&#160;</td></tr>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">7,364,346</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid; padding-bottom: 1.5pt">&#160;</td>
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    <td>&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">$</td><td style="text-align: right">82.03</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(1.61</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="border-left: Black 1.5pt solid; padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(7.80</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid">&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td style="font-weight: bold">Expenses</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">Lease operating expenses</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Oil and Natural Gas Sales</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our revenues vary from year
to year primarily as a result of changes in realized commodity prices and production volumes. For the three months ended September 30,
2024, our oil and natural gas sales decreased 18% from the three months ended September 30, 2023, driven by a 6% increase in realized
prices, excluding the effect of settled commodity derivatives, and a 17% decrease in production volumes, and $1,900,662 in derivative
instrument gains in the three months ended September 30, 2024. Realized production from oil and gas properties decreased due to the sale
of the ORRI of 10% by the Predecessor in July 2023 and actual decrease in production due to an increase in well downtime, and the impact
of water injection flowlines that needed repair or replacement.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><!-- Field: Page; Sequence: 92; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->86<!-- Field: /Sequence --></p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Production for the comparable periods is set forth
in the following table:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Derivative Contracts</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We enter into commodity derivatives
instruments to manage the price risk attributable to future oil production. We recorded a gain on derivative contracts of $1,900,662 for
the three months ended September 30, 2024, compared to a loss of $1,436,100 for the three months ended September 30, 2023. Higher commodity
prices in the three months ended September 30, 2024, resulted in realized losses of $107,969 compared to realized losses of $600,740 for
the three months ended September 30, 2023. For the three months ended September 30, 2024, unrealized gains were $2,008,631 compared to
unrealized losses of $835,360 for the three months ended September 30, 2023.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">For the three months ended
September 30, 2024, our average realized oil price per barrel after reflecting settled derivatives was $77.12 compared to $74.23 for the
three months ended September 30, 2023. For the three months ended September 30, 2024, our settled derivatives decreased our realized oil
price per barrel by $1.61 compared to decreasing the price per barrel by $7.80 for the three months ended September 30, 2023. As of September
30, 2024, we ended the period with a $794,195 net derivative asset compared to a net asset of $467,687 as of December 31, 2023.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Other Revenue</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Other revenue was $98,452 for the three months
ended September 30, 2024, compared to $143,714 for the three months ended September 30, 2023. The revenue is related to providing water
services to a third party. The contract is for one year starting on September 1, 2022, and can be renewed by mutual agreement.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Lease Operating Expenses</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Lease operating expenses were
$2,136,732 for the three months ended September 30, 2024, compared to $2,449,140 for the three months ended September 30, 2023. On a per
unit basis, production expenses increased 4.8% from $26.60 per BOE for the three months ended September 30, 2023, to $27.87 per BOE for
the three months ended September 30, 2024, due primarily to increases in proactive maintenance activities.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Production Taxes, Transportation and
Processing</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We pay production taxes, transportation
and processing costs based on realized oil and natural gas sales. Production taxes, transportation and processing costs were $489,524
for the three months ended September 30, 2024, compared to $602,449 for the three months ended September 30, 2023. As a percentage of
oil and natural gas sales, these costs were 9% and 9% in the three months ended September 30, 2024, and 2023, respectively. Production
taxes, transportation, and processing as a percent of total oil and natural gas sales are consistent with historical trends.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Depletion, Depreciation and Amortization</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Depletion, depreciation and
amortization (&#8220;DD&amp;A&#8221;) was $507,626 for the three months ended September 30, 2024, compared to $426,838 for the three months
ended September 30, 2023. DD&amp;A was $6.62 per BOE for the three months ended September 30, 2024 compared to $4.64 per BOE for the three
months ended September 30, 2023. The aggregate increase in DD&amp;A expense for the three months ended September 30, 2024, compared to
the three months ended September 30, 2023, was driven by the increase in the oil and gas properties balance due the recognition of the
reserves at fair value as a result of the acquisition of the Pogo business by us on November 15, 2023.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Accretion of Asset Retirement Obligations</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Accretion expense was $10,395
for the three months ended September 30, 2024, compared to $200,789 for the three months ended September 30, 2023. Accretion expense was
$0.14 per BOE for the three months ended September 30, 2024, compared to $2.18 per BOE for the three months ended September 30, 2023.
The aggregate decrease in accretion expense for the three months ended September 30, 2024, compared to the three months ended September
30, 2023, was driven by changes in certain assumptions, specifically the inflation factor and discount rate as a result of the acquisition
date where we revised our estimates as part of its fair value estimates for the acquired business on November 15, 2023.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>General and Administrative</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">General and administrative
expenses were $2,235,263 for the three months ended September 30, 2024, compared to $981,751 for the three months ended September 30,
2023. The increase in general and administrative expenses is primarily due to increased cost of outsourced legal, professional, and accounting
services from being a public company, and stock-based compensation in the current period of $326,995.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Interest Expense and amortization of financing
costs</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Interest expense was $1,841,848
for the three months ended September 30, 2024, compared to $554,262 for the three months ended September 30, 2023. The Successor period
interest expense is driven by the Senior Secured term loan entered into as part of the Closing, and the Private Notes Payable. The Predecessor
interest expense for the three months ended September 30, 2023 relates to the Predecessor&#8217;s revolving credit facility outstanding
and an increase in the weighted average interest rate. This revolving credit facility was not assumed in the Acquisition. Amortization
of financing costs was $507,701 and was primarily associated with discount on our Private Notes Payable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Change in fair value of forward purchase agreement</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The change in fair value of
forward purchase agreement consisted of a loss of $4,209,294 for the three months ended September 30, 2024 for the Successor related to
the inputs used in our fair value estimate of the FPA Put Option, primarily the decline in our stock price during the three months ended
September 30, 2024. The key inputs to the fair value estimate include our stock price, which declined during the Successor period, and
the likelihood, timing and price of a potential dilutive offering.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Change in fair value of warrant liabilities</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The change in fair value of
warrant liabilities consisted of a loss of $137,911 for the three months ended September 30, 2024 related to fluctuations in the trading
price of our warrants, a portion of which are accounted for as liabilities due to the redemption provisions in those issued to Private
Note holders.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Nine months ended September 30, 2024 (Successor)
Compared to nine months ended September 30, 2023</i></b></p><div>

</div><p style="font: 8pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following table sets forth selected operating
data for the periods indicated. Average sales prices are derived from accrued accounting data for the relevant period indicated.</p><div>

</div><p style="font: 8pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Nine<br/> Months<br/> Ended<br/> September&#160;30,<br/> 2024</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="border-left: Black 1.5pt solid; font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom">
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    <td colspan="2" style="text-align: right">&#160;</td><td>&#160;</td><td style="border-left: Black 1.5pt solid">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt">General and administrative</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">6,868,749</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">Costs and expenses (per BOE):</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">$</td><td style="text-align: right">5.80</td><td style="text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid">&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">5.82</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">28.54</td><td style="text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">24.12</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Depreciation, depletion, and amortization expense</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">6.58</td><td style="text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">4.22</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">0.37</td><td style="text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">2.65</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">30.02</td><td style="text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">10.20</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">342</td><td style="text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid">&#160;</td>
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  </table><div>


</div><p style="font: 8pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Oil and Natural Gas Sales</i></p><div>

</div><p style="font: 8pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">For the Nine Months Ended <br/> September 30,</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2024</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2023</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>Production:</td><td>&#160;</td>
    <td colspan="2">&#160;</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2">&#160;</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 76%; text-align: left; padding-left: 9pt">Oil (MBbl)</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">198</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">259</td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-bottom: 1.5pt; padding-left: 9pt">Natural gas (MMcf)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">185</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">275</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 1.5pt; padding-left: 9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Total (MBOE)<sup>(1)</sup></span></td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">229</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">732</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">686</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; ">
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">846</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  </table><div>

</div><p style="font: 8pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0.25IN"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(1)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Natural gas is converted to BOE at the rate of one-barrel equals six Mcf based upon the approximate relative energy content of oil and natural gas, which is not necessarily indicative of the relationship of oil and natural gas prices.</span></td></tr>
  </table><div>
</div><p style="font: 8pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 95; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->89<!-- Field: /Sequence --></p></div><div>
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    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Derivative Contracts</i></p><div>

</div><p style="font: 8pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We enter into commodity derivatives
instruments to manage the price risk attributable to future oil production. We recorded a loss on derivative contracts of $180,063 for
the nine months ended September 30, 2024, compared to a loss of $673,057 for the nine months ended September 30, 2023. Higher commodity
prices in the nine months ended September 30, 2024, resulted in realized losses of $506,571 compared to realized losses of $899,395 for
the nine months ended September 30, 2023. For the nine months ended September 30, 2024, unrealized gains were $326,508 compared to unrealized
gains of $226,338 for the nine months ended September 30, 2023.</p><div>

</div><p style="font: 8pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">For the nine months ended
September 30, 2024, our average realized oil price per barrel after reflecting settled derivatives was $73.87 compared to $73.03, for
the nine months ended September 30, 2023. For the nine months ended September 30, 2024, our settled derivatives decreased our realized
oil price per barrel by $2.56 compared to decreasing the price per barrel by $3.47 for the nine months ended September 30, 2023. As of
September 30, 2024, we ended the period with a $794,195 net derivative asset compared to a net asset of $467,687 as of December 31, 2023.</p><div>

</div><p style="font: 8pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Other Revenue</i></p><div>

</div><p style="font: 8pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Other revenue was $359,270
for the nine months ended September 30, 2024, compared to $461,435 for the nine months ended September 30, 2023. The revenue is related
to providing water services to a third party. The contract is for one year starting on September 1, 2022, and can be renewed by mutual
agreement.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Lease Operating Expenses</i></p><div>

</div><p style="font: 8pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Lease operating expenses were
$6,530,431 for the nine months ended September 30, 2024, compared to $7,354,304 for the nine months ended September 30, 2023. On a per
unit basis, production expenses increased 18% from $24.12 per BOE for the nine months ended September 30, 2023, to $28.54 per BOE for
the nine months ended September 30, 2024, due primarily to increases in proactive maintenance activities.</p><div>

</div><p style="font: 8pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Production Taxes, Transportation and Processing</i></p><div>

</div><p style="font: 8pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Depletion, depreciation and
amortization (&#8220;DD&amp;A&#8221;) was $1,506,242 for the nine months ended September 30, 2024, compared to $1,285,830 for the nine
months ended September 30, 2023. DD&amp;A was $6.58 per BOE for the nine months ended September 30, 2024 compared to $4.22 per BOE for
the nine months ended September 30, 2023. The aggregate increase in DD&amp;A expense for the nine months ended September 30, 2024, compared
to the nine months ended September 30, 2023, was driven by the increase in the oil and gas properties balance due to the recognition of
the reserves at fair value as a result of the acquisition of the Pogo business by us on November 15, 2023.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Accretion of Asset Retirement Obligations</i></p><div>

</div><p style="font: 8pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Accretion expense was $83,926
for the nine months ended September 30, 2024, compared to $809,423 for the nine months ended September 30, 2023. Accretion expense was
$0.37 per BOE for the nine months ended September 30, 2024, compared to $2.65 per BOE for the nine months ended September 30, 2023. The
aggregate decrease in accretion expense for the nine months ended September 30, 2024, compared to the nine months ended September 30,
2023, was driven by changes in certain assumptions, specifically the inflation factor and discount rate as a result of the acquisition
date where we revised our estimates as part of its fair value estimates for the acquired business on November 15, 2023</p><div>

</div><p style="font: 8pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>General and Administrative</i></p><div>

</div><p style="font: 8pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">General and administrative
expenses were $6,868,749 for the nine months ended September 30, 2024, compared to $3,111,130 for the nine months ended September 30,
2023. The increase for general and administrative expenses is primarily due to increased cost of outsourced legal, professional, and accounting
services from being a public company, and stock-based compensation in the current period of $1,516,933.</p><div>

</div><p style="font: 8pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Interest Expense and amortization of financing
costs</i></p><div>

</div><p style="font: 8pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Interest expense was $5,732,747
for the nine months ended September 30, 2024, compared to $1,429,200 for the nine months ended September 30, 2023. The Successor period
interest expense is driven by the Senior Secured Term loan entered into as part of the Closing, and the Private Notes Payable. The Predecessor
interest expense for the nine months ended September 30, 2023 relates to the Predecessor&#8217;s revolving credit facility outstanding
and an increase in the weighted average interest rate. This revolving credit facility was not assumed in the Acquisition. Amortization
of financing costs was $1,982,958 and was primarily associated with discount on our Private Notes Payable.</p><div>

</div><p style="font: 8pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Change in fair value of forward purchase agreement</i></p><div>

</div><p style="font: 8pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The change in fair value of
forward purchase agreement consisted of a loss of $4,534,766 for the nine months ended September 30, 2024 for the Successor related to
the inputs used in our fair value estimate of the FPA Put Option, primarily due to the decline in our stock price on a year to date basis.
The key inputs to the fair value estimate include our stock price, which declined during the Successor period, and the likelihood, timing
and price of a potential dilutive offering.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Change in fair value of warrant liabilities</i></p><div>

</div><p style="font: 8pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The change in fair value
of warrant liabilities consisted of a loss of $484,799 for the nine months ended September 30, 2024 related to fluctuations in the trading
price of our warrants, a portion of which are accounted for as liabilities due to the redemption provisions in those issued to Private
Note holders.</p><div>

</div><p style="font: 8pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Results of Operations For the Years ended December
31, 2023 and 2022</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">For the year ended December
31, 2023, 97% and 3% of sales volumes from the assets were attributable to crude and natural gas, respectively. As of December 31, 2023,
the company was continuing development of the Seven River waterflood interval. Further, as of December 31, 2023, the Company owned an
interest in approximately 342 gross (342 net) producing wells.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following table sets forth
selected operating data for the periods indicated. Average sales prices are derived from accrued accounting data for the relevant period
indicated.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Successor</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="border-left: Black 1.5pt solid; font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
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    <td style="font-weight: bold">Expenses</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">3,484,477</td><td style="text-align: left">&#160;</td></tr>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">8,692,752</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">8,418,739</td><td style="text-align: left">&#160;</td></tr>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">1,613,402</td><td style="text-align: left">&#160;</td></tr>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">848,040</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">1,575,296</td><td style="text-align: left">&#160;</td></tr>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">8.09</td><td style="text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">0.25</td><td style="text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">342</td><td style="text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">342</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 97; Value: 1 --><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Oil and Natural Gas Sales</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our revenues vary from year
to year primarily as a result of changes in realized commodity prices and production volumes. On a combined Successor and Predecessor
basis, for the year ended December 31, 2023, our oil and natural gas sales decreased 34% from the year ended December 31, 2022, driven
by a 24% decrease in realized prices, excluding the effect of settled commodity derivatives, and an 21% decrease in production volumes.
The lower average price in the combined year ended December 31, 2023 compared to 2022, was driven by lower average NYMEX oil and natural
gas prices. Realized production from oil and gas properties decreased due to an increase in well downtime and due to the July 1, 2023
conveyance of the 10% overriding royalty interest to Pogo Royalty.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Production for the comparable
periods is set forth in the following table:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: bottom">
    <td>&#160;</td>
    <td>&#160;</td>
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December 31,</b></span></td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td>
    <td>&#160;</td>
    <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>2023</b></span></td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>2022</b></span></td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Production:</span></td>
    <td>&#160;</td>
    <td colspan="2">&#160;</td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td colspan="2">&#160;</td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
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    <td style="width: 1%">&#160;</td>
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    <td style="width: 1%">&#160;</td>
    <td style="width: 1%">&#160;</td>
    <td style="width: 8%; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">397</span></td>
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  <tr style="vertical-align: bottom">
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    <td>&#160;</td>
    <td style="border-bottom: black 1.5pt solid">&#160;</td>
    <td style="border-bottom: black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">356</span></td>
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    <td>&#160;</td>
    <td style="border-bottom: black 1.5pt solid">&#160;</td>
    <td style="border-bottom: black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">457</span></td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
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    <td style="border-bottom: black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">409</span></td>
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    <td>&#160;</td>
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    <td>&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: right">&#160;</td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: right">&#160;</td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Average daily production:</span></td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: right">&#160;</td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: right">&#160;</td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: bottom">
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    <td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: #CCEEFF">
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    <td>&#160;</td>
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    <td>&#160;</td>
    <td style="border-bottom: black 1.5pt solid">&#160;</td>
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    <td>&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="padding-left: 9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Total (BOE)<sup>(1)</sup></span></td>
    <td>&#160;</td>
    <td style="border-bottom: black 1.5pt solid">&#160;</td>
    <td style="border-bottom: black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">1,022</span></td>
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    <td>&#160;</td>
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    <td>&#160;</td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.25IN"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(1)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Natural gas is converted to BOE at the rate of one-barrel equals six Mcf based upon the approximate relative energy content of oil and natural gas, which is not necessarily indicative of the relationship of oil and natural gas prices.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Derivative Contracts</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We enter into commodity derivatives
instruments to manage the price risk attributable to future oil production.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We recorded a gain on derivative
contracts of $392,675 on a combined Successor and Predecessor basis for the year ended December 31, 2023 compared to a loss of $4,793,790
for the year ended December 31, 2022 (Predecessor). Lower commodity prices in 2023, resulted in realized losses of $1,266,277 on a combined
Successor and Predecessor basis for the year ended December 31, 2023 compared to realized losses of $6,978,790 for the year ended December
31, 2022. On a combined Successor and Predecessor basis for the year ended December 31, 2023, our average realized oil price per barrel
after reflecting settled derivatives was $73.82, compared to $78.09 the year ended December 31, 2022 (Predecessor).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As of December 31, 2023, we
ended the period with a $467,687 net derivative asset compared to $1,191,354 as of December 31, 2022.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Other Revenue</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Other revenue was $571,189
on a combined Successor and Predecessor basis for the year ended December 31, 2023, compared to $255,952 for the year ended December 31,
2022 (Predecessor). The increase is due to a full period related to a new contract that the Predecessor entered into to provide water
services to a third-party effective September 1, 2022.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Lease Operating Expenses</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Lease operating expenses were
$10,146,119 on a combined Successor and Predecessor basis for the year ended December 31, 2023, compared to $8,418,739 for the year ended
December 31, 2022. On a per unit basis, production expenses increased 53% from $17.79 per BOE for the combined Successor and Predecessor
year ended December 31, 2023, to $27.20 per BOE for the combined Successor and Predecessor year ended December 31, 2023, due to increases
in proactive maintenance activities, higher labor costs, and increased oil field service and supplies costs. Additionally, because of
the conveyance of the 10% ORRI in July 2023, the net production volumes decreased, which increases the &#8220;per BOE&#8221; amounts.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Production Taxes, Transportation and Processing</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We pay production taxes, transportation
and processing costs based on realized oil and natural gas sales. Production taxes, transportation and processing costs were $2,343,862
on a combined Successor and Predecessor basis for the year ended December 31, 2023, compared to $3,484,477 for the year ended December
31, 2022. As a percentage of oil and natural gas sales, these costs were 9% in both periods. Production taxes, transportation, and processing
as a percent of total oil and natural gas sales are consistent with historical trends.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Depletion, Depreciation and Amortization</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Depletion, depreciation and
amortization (&#8220;DD&amp;A&#8221;) was $1,849,876 on a combined Successor and Predecessor basis for the year ended December 31, 2023,
compared to $1,613,402 for the year ended December 31, 2022. DD&amp;A was $4.53 per BOE on a combined Successor and Predecessor basis
for the year ended December 31, 2023, compared to $3.41 per BOE for the year ended December 31, 2022. The aggregate increase in DD&amp;A
expense for the year ended December 31, 2023 compared to 2022 was driven by a 33% increase in the DD&amp;A rate per BOE, partially offset
by a 21% decrease in production levels. The increase in the DD&amp;A rate per BOE was driven by the increase in the oil and gas properties
balance due to the development of the Seven Rivers waterflood interval and the decrease in the reserves balance due to the conveyance
of the 10% overriding royalty interest to Pogo Royalty.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Accretion of Asset Retirement Obligations</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Accretion expense was $859,102
on a combined Successor and Predecessor basis for the year ended December 31, 2023, compared to $1,575,296 for the year ended December
31, 2022. Accretion expense was $2.32 per BOE for the on a combined Successor and Predecessor basis for the year ended December 31, 2023,
compared to $3.33 per BOE for the year ended December 31, 2022. The aggregate decrease in accretion expense for the fiscal year ended
December 31, 2023 compared to 2022 was driven by changes in certain assumptions, specifically the inflation factor and discount rate as
a result of the acquisition date where we revised our estimates as part of its fair value estimates for the acquired business.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>General and Administrative</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">General and administrative
expenses were $7,253,384 on a combined Successor and Predecessor basis for the year ended December 31, 2023, compared to $2,953,202 for
the year ended December 31, 2022. The increase for general and administrative expenses is primarily due to increased cost of outsourced
legal, professional, and accounting services&#160;as a result of the transaction disclosed in Note 1 in the notes to the consolidated
financial statements and the costs of being a public company. The general and administrative expense total of $3,553,117 for the period
from November 15, 2023 to December 31, 2023 for the Successor includes $1,500,000 from the 138,122 shares of Class A common stock issued
to White Lion for the commitment fee on the Common Stock Purchase Agreement, $910,565 in stock-based compensation to certain Founders
under the Founder Pledge Agreement, and $135,400 in other stock-based compensation.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Acquisition costs</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Acquisition costs were $9,999,860
during the Successor period from November 15, 2023 to December 31, 2023, and included an aggregate of $7,854,660 in costs related to the
Forward Purchase Agreement and the Non-Redemption Agreements, due diligence and broker fees related to closing the Purchase.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Interest Expense and amortization of debt discount</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Interest expense was $1,043,312
for the period from November 15, 2023 to December 31, 2023 (Successor), $1,834,208 for the period from January 1, 2023 to November 14,
2023 (Predecessor), compared to $1,076,060 for the year ended December 31, 2022. The Successor period interest expense is driven by the
Senior Secured Term loan entered into as part of the Closing, and the Private Notes Payable. The increase in the Predecessor period from
January 1, 2023 to November 15, 2023 compared to the year ended December 31, 2022 was primarily due to an increase in the average amount
of the Predecessor&#8217; revolving credit facility outstanding and an increase in the weighted average interest rate. The revolving credit
facility was not assumed in the Acquisition.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Amortization of debt discount
was $1,191,553 period from November 15, 2023 to December 31, 2023 (Successor), and attributable to deferred finance costs paid on the
Senior Secured Term Loan, and discounts associated with the Private Notes Payable during 2023.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Change in fair value of forward purchase agreement</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The change in fair value of
forward purchase agreement consisted of a gain of $3,268,581 for the period from November 15, 2023 to December 31, 2023 for the Successor
related to the inputs used in the Company&#8217;s fair value estimate of the FPA Put Option. The key inputs to the fair value estimate
include the Company&#8217;s stock price, which declined during the Successor period, and the likelihood, timing and price of a potential
dilutive offering.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Change in fair value of warrant liabilities</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The change in fair value of
warrant liabilities consisted of a gain of $187,704 for the period from November 15, 2023 to December 31, 2023 for the Successor related
to fluctuations in the trading price of the Company&#8217;s warrants, a portion of which are accounted for as liabilities due to the redemption
provisions in those issued to Private Note holders.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Loss on asset sales</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Loss on asset sales was $816,011
on a combined Successor and Predecessor basis for the year ended December 31, 2023, compared to $0 for the year ended December 31, 2022.
The increase was due to the loss that was recognized as a result of the conveyance of the 10% overriding royalty interest to Pogo Royalty
in July 2023.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Liquidity and Capital Resources</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Liquidity</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our main sources of liquidity
have been internally generated cash flows from operations and credit facility borrowings. Our primary use of capital has been for the
development of oil and gas properties and the return of initial invested capital to our owners. We continually monitor potential capital
sources for opportunities to enhance liquidity or otherwise improve our financial position.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As of September 30, 2024,
we had outstanding debt of $24,735,391 under our Senior Secured Term Loan, $15,000,000 under the Seller Promissory Note, and $3,875,750
of outstanding private notes payable and $1,019,037 from merchant cash advances. A total of $15,048,293 of this is due within one year,
including a $5,000,000 estimated excess cash flow payment under the terms of the Senior Secured Term Loan. As of September 30, 2024,
we had $2,746,896 of cash and cash equivalents on hand, of which $2,600,000 is in an escrow account pursuant to the requirements of the
Senior Secured Term Loan, and had a working capital deficit of $38,801,444. These conditions raise substantial doubt about our ability
to continue as a going concern within one year after the date that the financial statements are issued.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Company had positive cash flow from operations
of $3,346,362 for the nine months ended September 30, 2024 and $8,675,037 for the year ended December 31, 2023 on a pro forma basis of
the combined Successor and Predecessor periods. Additionally, management&#8217;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. We have a three-year Common Stock Purchase Agreement with a maximum funding limit of $150,000,000 that
can fund our operations and production growth, and be used to reduce liabilities. Through the date of this filing, we have received $4,575,714
in cash proceeds related to the sale of 4,000,000 shares of common stock under this agreement and expect to continue to utilize it to
fund operational needs. We cannot assure you, however, that any additional capital will be available to us on favorable terms or at all.
Our capital expenditures could be curtailed if our cash flows decline from expected levels.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Cash Flows</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Sources and uses of cash for the nine months ended
September 30, 2024 and 2023, are as follows:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Nine Months<br/> Ended<br/> September&#160;30,<br/> 2024</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="border-left: Black 1.5pt solid; font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Nine Months<br/> Ended <br/> September&#160;30,<br/> 2023</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; font-style: italic">&#160;</td>
    <td colspan="2" style="font-weight: bold; font-style: italic; text-align: center">Successor</td><td style="font-weight: bold; font-style: italic">&#160;</td><td style="border-left: Black 1.5pt solid; font-weight: bold; font-style: italic">&#160;</td>
    <td colspan="2" style="font-weight: bold; font-style: italic; text-align: center">Predecessor</td><td style="font-weight: bold; font-style: italic">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 76%; text-align: left">Net cash provided by operating activities</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">3,346,362</td><td style="width: 1%; text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid; width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">8,311,832</td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">Net cash (used in) provided by investing activities</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(3,295,667</td><td style="text-align: left">)</td><td style="border-left: Black 1.5pt solid">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(5,058,869</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt">Net cash (used in) provided by financing activities</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(809,253</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="border-left: Black 1.5pt solid; padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(2,000,000</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-bottom: 1.5pt">Net change in cash and cash equivalents</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">(758,558</td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left">)</td><td style="border-left: Black 1.5pt solid; font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">1,252,963</td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left">&#160;</td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Sources and uses of cash for
the years ended December 31, 2023, and 2022, are as follows:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Successor</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="border-left: Black 1.5pt solid; font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Predecessor</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">January 1,<br/> 2023 to<br/> November&#160;14,<br/> 2023</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Year Ended<br/> December&#160;31,<br/> 2022</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td>&#160;</td>
    <td colspan="2">&#160;</td><td>&#160;</td><td style="border-left: Black 1.5pt solid">&#160;</td>
    <td colspan="2">&#160;</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2">&#160;</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 64%; text-align: left">Net cash provided by operating activities</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">484,474</td><td style="width: 1%; text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid; width: 1%">&#160;</td>
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  <tr style="vertical-align: bottom; ">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Operating Activities</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The decrease in net cash flow
provided by operating activities for the nine months ended September 30, 2024, as compared to 2023 is primarily due to decreased production
volumes, and higher general and administrative and acquisition costs associated with public filings.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The decrease in net cash flow
provided by operating activities on a combined Successor and Predecessor basis for the year ended December 31, 2023, as compared to 2022
is primarily due to decreased net income as a result of decreased prices and production volumes, and higher general and administrative
and acquisition costs associated with public filings and the closing of the Acquisition.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Investing Activities</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Net cash used in investing
activities for the nine months ended September 30, 2024 was primarily related to $3,275,667 in development costs for our reserves. Cash
flows used in investing activities in the Predecessor period for the nine months ended September 30, 2023 consisted primarily of $4,867,872
of cash paid for oil and gas property costs.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Net cash provided by investing
activities in the Successor period was primarily due to Trust Account withdrawals associated with the Closing in November 2023 of $49,362,479,
partially offset by the cash paid to the Sellers of Pogo of $30,827,804 at the Closing, net of cash acquired. Cash flows used in investing
activities in the Predecessor period ending November 14, 2023 consisted of $6,769,557 of cash paid for oil and gas property costs, which
was a decrease from $16,891,856 in the year ended December 31, 2022, primarily due to significant expenditures in the previous year to
upgrade certain wells and meet compliance requirements.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Financing Activities</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Net cash used by financing
activities during the Successor period were primarily related to repayments of the Senior Secured Term Loan of $2,945,312 and Private
Notes Payable of $43,750, partially offset by $1,184,272 in cash proceeds from sales of common stock under the Common Stock Purchase Agreement,
$967,500 in cash proceeds from merchant cash advances, and an additional $450,000 in cash proceeds from the Private Notes Payable issued
during the nine months ended September 30, 2024. Cash flows used in financing activities in the Predecessor period for the nine months
ended September 30, 2023 consisted primarily of $2,000,000 in long-term debt repayments.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Net cash used by financing
activities during the Successor period were primarily related to the redemptions of common stock of Public Shares at Closing of $44,737,839,
partially offset by the net proceeds from the Senior Secured Term Loan of $27,191,008.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Off Balance Sheet Arrangements</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As of June 30, 2024, the Company
did not have any off-balance sheet arrangements, as defined in the rules and regulations of the Securities and Exchange Commission (&#8220;SEC&#8221;).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Contractual Obligations</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have contractual commitments
under our Senior Secured Term Loan, the Seller Promissory Note and the Private Notes Payable which include periodic interest payments.
See Note 5 to our interim condensed consolidated unaudited financial statements. We have contractual commitments that may require us to
make payments upon future settlement of our commodity derivative contracts. See Note 4 to our interim condensed consolidated unaudited
financial statements.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our other liabilities represent
current and noncurrent other liabilities that are primarily comprised of environmental contingencies, asset retirement obligations and
other obligations for which neither the ultimate settlement amounts nor their timings can be precisely determined in advance.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Critical Accounting Estimates</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following is a discussion
of our most critical accounting estimates, judgements and uncertainties that are inherent in the Company&#8217;s application of GAAP.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Successful Efforts Method of Accounting</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We utilize the successful
efforts method of accounting for crude oil and gas producing activities as opposed to the alternate acceptable full cost method. In general,
we believe that net assets and net income are more conservatively measured under the successful efforts method of accounting for crude
oil and gas producing activities than under the full cost method, particularly during periods of active exploration. The critical difference
between the successful efforts method of accounting and the full cost method is that under the successful efforts method, exploratory
dry holes and geological and geophysical exploration costs are charged against earnings during the periods in which they occur; whereas,
under the full cost method of accounting, such costs and expenses are capitalized as assets, pooled with the costs of successful wells
and charged against the earnings of future periods as a component of depletion expense.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Proved Reserve Estimates</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Estimates of our proved reserves
included in this report are prepared in accordance with GAAP and SEC guidelines. The accuracy of a proved reserve estimate is a function
of:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
    <td style="width: 0.25IN"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
    <td style="width: 0.25IN"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
    <td style="width: 0.25IN"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
    <td style="width: 0.25IN"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our proved reserve information
included in this filing as of December 31, 2023 and 2022, was prepared by independent petroleum engineers. Because these estimates depend
on many assumptions, all of which may substantially differ from future actual results, proved reserve estimates will be different from
the quantities of oil and gas that are ultimately recovered. In addition, results of drilling, testing and production after the date of
an estimate may justify, positively or negatively, material revisions to the estimate of proved reserves.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">It should not be assumed that
the standardized measure included as of December 31, 2023, is the current market value of our estimated proved reserves. In accordance
with SEC requirements, we based the 2023 standardized measure on a twelve-month average of commodity prices on the first day of each month
in 2023 and prevailing costs on the date of the estimate. Actual future prices and costs may be materially higher or lower than the prices
and costs utilized in the estimate. See Note 12 of notes to the consolidated financial statements for additional information.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our estimates of proved reserves
materially impact depletion expense. If the estimates of proved reserves decline, the rate at which we records depletion expense will
increase, reducing future net income. Such a decline may result from lower commodity prices, which may make it uneconomical to drill for
and produce higher cost fields. In addition, a decline in proved reserve estimates may impact the outcome of our assessment of our proved
properties for impairment.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Impairment of Proved Oil and Gas Properties</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We review our proved properties
to be held and used whenever management determines that events or circumstances indicate that the recorded carrying value of the properties
may not be recoverable. Management assesses whether or not an impairment provision is necessary based upon estimated future recoverable
proved reserves, commodity price outlooks, production and capital costs expected to be incurred to recover the reserves, discount rates
commensurate with the nature of the properties and net cash flows that may be generated by the properties. Proved oil and gas properties
are reviewed for impairment at the level at which depletion of proved properties is calculated. See Note 2 of notes to the consolidated
financial statements.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>Asset Retirement Obligations</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have significant obligations
to remove tangible equipment and facilities and to restore the land at the end of crude oil and natural gas production operations. Our
removal and restoration obligations are primarily associated with plugging and abandoning wells. Estimating the future restoration and
removal costs is difficult and requires management to make estimates and judgments because most of the removal obligations are many years
in the future and contracts and regulations often have vague descriptions of what constitutes removal. Asset removal technologies and
costs are constantly changing, as are regulatory, political, environmental, safety and public relations considerations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Inherent in the present value
calculation are numerous assumptions and judgments including the ultimate settlement amounts, credit-adjusted discount rates, timing of
settlement and changes in the legal, regulatory, environmental and political environments. To the extent future revisions to these assumptions
impact the present value of the existing asset retirement obligations, a corresponding adjustment is generally made to the crude oil and
natural gas property or other property and equipment balance. See Note 5 of notes to the consolidated financial statements.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Litigation and Environmental Contingencies</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We make judgments and estimates
in recording liabilities for ongoing litigation and environmental remediation. Actual costs can vary from such estimates for a variety
of reasons. The costs to settle litigation can vary from estimates based on differing interpretations of laws and opinions and assessments
on the amount of damages. Similarly, environmental remediation liabilities are subject to change because of changes in laws and regulations,
developing information relating to the extent and nature of site contamination and improvements in technology. A liability is recorded
for these types of contingencies if we determine the loss to be both probable and reasonably estimable. See Note 9 of notes to the consolidated
financial statements.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>Forward Purchase Agreement Valuation</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Company has determined
that the FPA Put Option, including the Maturity Consideration, within the Forward Purchase Agreement is (i) a freestanding financial instrument
and (ii) a liability (i.e., an in-substance written put option). This liability was recorded as a liability at fair value on the consolidated
balance sheet as of the reporting date in accordance with ASC 480. The fair value of the liability was estimated using a Monte-Carlo Simulation
in a risk-neutral framework. Specifically, the future stock price is simulated assuming a Geometric Brownian Motion (&#8220;GBM&#8221;).
For each simulated path, the forward purchase value is calculated based on the contractual terms and then discounted back to present.
Finally, the value of the forward is calculated as the average present value over all simulated paths. The model also considered the likelihood
of a dilutive offering of common stock.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Derivative Instruments</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Company uses derivative
financial instruments to mitigate its exposure to commodity price risk associated with oil prices. The Company&#8217;s derivative financial
instruments are recorded on the consolidated balance sheets as either an asset or a liability measured at fair value. The Company has
elected not to apply hedge accounting for its existing derivative financial instruments, and as a result, the Company recognizes the change
in derivative fair value between reporting periods currently in its consolidated statements of operations. The fair value of the Company&#8217;s
derivative financial instruments is determined using industry-standard models that consider various inputs including: (i)&#160;quoted
forward prices for commodities, (ii)&#160;time value of money and (iii)&#160;current market and contractual prices for the underlying
instruments, as well as other relevant economic measures. Realized gains and losses from the settlement of derivative financial instruments
and unrealized gains and unrealized losses from valuation changes in the remaining unsettled derivative financial instruments are reported
in a single line item as a component of revenues in the consolidated statements of operations. Cash flows from derivative contract settlements
are reflected in operating activities in the accompanying consolidated statements of cash flows. See Note&#160;4 for additional information
about the Company&#8217;s derivative instruments.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>New Accounting Pronouncements</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The effects of new accounting
pronouncements are discussed in Note 2 to the consolidated financial statements.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><div><a id="k_012"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>MANAGEMENT</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our Board of Directors consists
of five directors. Three of the five directors are independent.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="border-bottom: black 1.5pt solid"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Name</b></span></td>
    <td>&#160;</td>
    <td style="border-bottom: black 1.5pt solid; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Age</b></span></td>
    <td>&#160;</td>
    <td style="border-bottom: black 1.5pt solid; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Title</b></span></td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td style="width: 35%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Dante Caravaggio</span></td>
    <td style="width: 1%">&#160;</td>
    <td style="width: 7%; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">67</span></td>
    <td style="width: 1%">&#160;</td>
    <td style="width: 56%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Chief Executive Officer, President and Director</span></td></tr>
  <tr style="vertical-align: bottom">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Mitchell B.&#160;Trotter</span></td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">65</span></td>
    <td>&#160;</td>
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Chief Financial Officer and Director</span></td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">David M. Smith</span></td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">69</span></td>
    <td>&#160;</td>
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">General Counsel and Secretary</span></td></tr>
  <tr style="vertical-align: bottom">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Joseph&#160;V. Salvucci Sr</span></td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">68</span></td>
    <td>&#160;</td>
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Director and Chairman</span></td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Joseph&#160;V. Salvucci Jr.</span></td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">39</span></td>
    <td>&#160;</td>
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Director</span></td></tr>
  <tr style="vertical-align: bottom">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Byron Blount</span></td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">67</span></td>
    <td>&#160;</td>
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Director</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b>Dante Caravaggio&#160;&#8212;&#160;Chief
Executive Officer, President and Director. </b>Mr. Caravaggio joined the company and has served as our Chief Executive Officer, President,
and Director since December 2023. Since April 2021, Mr. Caravaggio has served as Chairman of SWI Excavating, one of the leading regional
underground utility contractors in Colorado. In addition, since January 2021, Mr. Caravaggio has served as a strategy consultant for Shuler
Industries to advance proprietary renewable technologies. From January 2020 to April 2022, Mr. Caravaggio served on the board of directors
of McCarl&#8217;s Inc., a leading energy constructor in the northeast United States. Prior to joining McCarl&#8217;s Inc., Mr. Caravaggio
was Senior Vice President, Hydrocarbons Americas for KBR (US) since January 2018. Prior to his role with KBR (US), Mr. Caravaggio held
a number of roles as an executive and project manager with Parsons Corp. and Jacobs Engineering, overseeing upstream and downstream hydrocarbon
projects. Mr. Caravaggio received his MBA at Pepperdine University in Malibu, California and his BS and MS in Petroleum Engineering at
the University of Southern California.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Mr.&#160;Caravaggio is qualified
to serve as CEO and as a member of our board of directors based on our review of his qualifications, attributes, and skills, including
his oil and gas management experience and oil and gas acquisition experience.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b>Mitchell B.&#160;Trotter&#160;&#8212;&#160;Chief
Financial Officer and Director. </b>Mr.&#160;Trotter joined the company and has served as our Senior Vice President of Finance since October&#160;2022
and became Chief Financial Officer and Director in November 2023. Mr.&#160;Trotter has 41&#160;years of experience beginning his career
in 1981 as an auditor with Coopers&#160;&amp; Lybrand for seven&#160;years. He then served as CFO of two private investor backed private
companies where the first was in real estate development and the latter in the engineering and construction industry. For the next 30&#160;years,
Mr.&#160;Trotter served in various CFO and Controller positions with three publicly traded companies in the engineering and construction
services industry which were: Earth Tech to 2002; Jacobs Engineering to 2017; and AECOM to 2022. In those roles Mr.&#160;Trotter managed
up to 400 plus staff across six continents supporting global operations with clients in multiple industries across private, semi-public
and public sectors. Mr.&#160;Trotter earned his BS Accounting from Virginia Tech in 1981 and his MBA from Virginia Commonwealth University
in 1994. He professional credentials are: Certified Public Accountant in Virginia; Certified Management Accountant; and Certified in Financial
Management.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Partners, LLC in 2012 to acquire
oil and gas leases for drilling in the Rocky Mountain region. At Mr.&#160;Orr&#8217;s direction, XNP Resources began acquiring a strategic
leasehold position in the Sand Wash Basin in Colorado. XNP Resources was able to secure a major leasehold position in the heart of what
has become the highly competitive Niobrara Shale formation in western Colorado. Since 2014, Mr.&#160;Orr has been developing an unconventional
resource play in Alaska that contains over 600&#160;billion cubic feet of gas in stacked coal reservoirs. More recently, Mr.&#160;Orr
assembled a team of oil and gas professionals in order to study certain oil provinces in Columbia. S.A.&#160;Mr.&#160;Orr also serves
as President and on the Board of Directors of Houston Natural Resources, Inc. Mr.&#160;Orr has a Bachelor of Science degree in Geology
from Texas A&amp;I University, with a minor in Mathematics.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b>David M. Smith, Esq.&#160;&#8212;
Vice President,&#160;General Counsel and Secretary of the Company.&#160;&#160;</b>Mr. Smith has served as our General Counsel and Secretary
since November 2023.<b>&#160;&#160;</b>Mr. Smith is a licensed attorney in Texas with over 40 years&#8217; experience in the legal field
of oil and gas exploration and production, manufacturing, purchase and sale agreements, exploration agreements, land and leaseholds, right
of ways, pipelines, surface use, joint operating agreements, joint interest agreements, participation agreements and operations as well
as transactional and litigation experience in oil and gas, real estate, bankruptcy and commercial industries. Mr. Smith purchased 142,500
shares of our Common Stock as a founder. Mr. Smith has represented a number of companies in significant oil and gas transactions, mergers
and acquisitions, intellectual property research and development and sales in the oil and gas drilling business sector. Mr. Smith began
his career by serving in a land and legal capacity as Vice President of Land and, subsequently, as President of a public Canadian company
until beginning his legal practice as a partner with several law firms and ultimately creating his own independent legal practice. Mr.
Smith holds a degree in Finance from Texas A&amp;M University, a Doctor of Jurisprudence from South Texas College of Law and is licensed
before the Texas Supreme Court.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b>Joseph&#160;V.&#160;Salvucci,
Sr.&#160;&#8212;&#160;Independent Director and Chairman of the Board. </b>Joseph&#160;V.&#160;Salvucci, Sr. has served as a member of
our board of directors since December&#160;2021. JVS Alpha Property, LLC, an entity which the majority is beneficially owned by Mr.&#160;Salvucci,
with the balance owned by his immediate family, purchased 940,000 shares of our Common Stock as a founder. Mr.&#160;Salvucci acquired
PEAK Technical Staffing USA (&#8220;PEAK&#8221;), peaktechnical.com in 1986 and has grown the business to be a premier provider of USA-based
contract engineers and technical specialists, on assignment worldwide through a comprehensive, customer focused, enterprise-wide Managed
Staffing Solution. During his 35-year tenure as owner of the company, PEAK has expanded from Pittsburgh to do business in all 50 States,
Canada, Europe, South America, India, and the Philippines. He served 10&#160;years on the board of directors culminating as President
and Board Chairman of the National Technical Services Association, a trade association representing 300,000 contractors on assignment
in the technical staffing industry that later merged with the American Staffing Association. He is an active member of the Young Presidents
Organization (YPO GOLD), formerly known as the World Presidents Organization (WPO) and has served as a member of the WPO International
Board, as well as chairman of East Central US (ECUS) Region and Pittsburgh chapters as Chairman of the Board. As a 1976 Civil Engineering
graduate of the University of Pittsburgh, he was a member of the Triangle (Engineering) Fraternity and its Alumni Association. He earned
the Triangle Fraternity Distinguished Alumnus Citation in 2011 and currently serves on the Board of Directors. After earning the rank
of Eagle Scout in 1970, he has remained active with the Boy Scouts of America, having served as the founding Chairman of the Board of
the Pittsburgh Chapter of the National Eagle Scout Association, earning the NOESA (National Outstanding Eagle Scout Award) and the Silver
Beaver Award and is past VP of Development and a board member of the Laurel Highlands Council in Western Pennsylvania. He was awarded
the Manifesting the Kingdom of God Award by the Catholic Diocese of Pittsburgh in 2011. He was awarded the &#8220;Big Mac Award&#8221;
from the Ronald McDonald Charities. As well as earning his BS in Civil Engineering from the University of Pittsburgh in 1976 and attended
Harvard Business School&#8217;s OPM 33, graduating in 2003.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b>Joseph&#160;V.&#160;Salvucci,
Jr</b>.&#160;<b>&#8212;&#160;Independent Director. </b>Joseph V. Salvucci, Jr. has served as a member of our board of directors since
December&#160;2021. Mr.&#160;Salvucci began his career with PEAK Technical Staffing USA in November&#160;2010 and is currently serving
as the Chief Executive Officer overseeing nine branches with several hundred employees, and managing strategic initiatives for the company,
including Staff Training, Career Pathing, and Organic Growth. Mr.&#160;Salvucci Jr received his Executive MBA from the University of Pittsburgh.
In addition to his responsibilities as President/COO of PEAK, Mr.&#160;Salvucci serves on the board of Temporary Services Insurance Limited,
a Workers&#8217; Compensation company serving staffing companies.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b>Byron Blount&#160;&#8212;&#160;Independent
Director. </b>Mr. Blount joined the board of directors and is the chair of the audit committee since November 2023. Mr. Blount has extensive
experience in finance, investments, and acquisitions. He was Managing Director for the Blackstone Real Estate Group from 2011 to 2021
where he: had Primary Asset Management responsibilities for several industries and portfolio companies; oversaw the onboarding of acquisitions
and establishment of Blackstone-affiliated portfolio companies; and had Primary Disposition responsibilities for several portfolios and
companies across several industries. Mr. Blount was the LXR/Blackstone Executive Vice President from 2005 to 2010. His primary responsibilities
involved: underwriting and acquisition of domestic and international property and mortgage loan portfolios; asset management; renovation
and reconstruction projects, debt, and business model restructuring; and dispute resolution. He was a Principal of Colony Capital from
1993 to 2004 and was responsible for sourcing and structuring new investments, consummating transactions valued in excess of $5 billion.
His Primary Acquisitions responsibilities included domestic and international acquisitions of real property, distressed mortgage debt,
and real estate-related assets and entities. From 1987 to 1992, Mr. Blount was Vice President of WSGP which was formed to capitalize on
the struggles of the US Savings and Loan industry and the FSLIC. He was responsible for structuring and managing/working out new investment
opportunities, generally acquired from failed financial institutions. He graduated from University of Southern California in 1982 with
a B.S. in Business Administration. Mr. Blount earned his MBA from University of Southern California&#8217;s Marshall School of Business
in 1987 and is a member Beta Gamma Sigma (International Business Honor Society).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><b>&#160;&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Family Relationships</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">There are no family relationships
between any of our officers and directors, except that Mr.&#160;Joseph&#160;V.&#160;Salvucci Sr. and Mr.&#160;Joseph&#160;V.&#160;Salvucci
Jr. are father and son, respectively.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Number and Terms of Office of Officers and
Directors</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our board of directors has
five directors. Our board of directors is divided into two classes with only one class of directors being elected in each year and each
class (except for those directors appointed prior to our first annual meeting of stockholders) serving a two-year term. The class&#160;I
directors consist of Dante Caravaggio and Joseph&#160;V.&#160;Salvucci, Jr., and their term will expire at our annual meeting of stockholders
to be held in 2026. The class&#160;II directors consist of Mitchell Trotter, Byron Blount, and Joseph&#160;V.&#160;Salvucci, Sr. and their
term will expire at the annual meeting of stockholders to be held in 2025.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our officers are elected by
the board of directors and serve at the discretion of the board of directors, rather than for specific terms of office. Our board of directors
is authorized to appoint persons to the offices set forth in our bylaws as it deems appropriate. Our bylaws provide that our officers
may consist of a Chief Executive Officer, President, Chief Financial Officer, Vice Presidents, Secretary, Assistant Secretaries, Treasurer
and such other offices as may be determined by the board of directors.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Director Independence</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The NYSE American listing
standards require that a majority of our board of directors be independent. An &#8220;independent director&#8221; is defined generally
as a person other than an officer or employee of the company or its subsidiaries or any other individual having a relationship which in
the opinion of the company&#8217;s board of directors, would interfere with the director&#8217;s exercise of independent judgment in carrying
out the responsibilities of a director. Of the current members of our board of directors, Messrs. Salvucci Sr., Salvucci Jr., and Byron
Blount are each considered an &#8220;independent director&#8221; under the NYSE American listing standards and applicable SEC rules. Our
independent directors will have regularly scheduled meetings at which only independent directors are present.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Committees of the Board of Directors</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The standing committees of
our Board of Directors consist of an audit committee (the &#8220;Audit Committee&#8221;), a compensation committee (the &#8220;Compensation
Committee&#8221;), and a Nominating and Corporate Governance Committee (the &#8220;Nominating Committee&#8221;). The Audit Committee,
Compensation Committee, and the Nominating Committee report to the Board.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Audit Committee</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The members of our Audit Committee
are Messrs. Blount and Salvucci Sr., and Mr.&#160;Blount serves as chairman of the Audit Committee. As a smaller reporting company under
the NYSE American listing standards, we are required to have at least two members on the Audit Committee. The rules of the NYSE American
and Rule&#160;10A-3 of the Exchange&#160;Act require that the audit committee of a listed company be comprised solely of independent directors.
Each of Messrs. Salvucci Sr. and Blount qualifies as an independent director under applicable rules. Each member of the Audit Committee
is financially literate and our board of directors has determined that Mr. Blount qualifies as an &#8220;audit committee financial expert&#8221;
as defined in applicable SEC rules.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">We have adopted an audit committee charter,
which details the principal functions of the audit committee, including:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
    <td style="width: 0.25IN; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the appointment, compensation, retention, replacement, and oversight of the work of the independent registered accounting firm and any other independent registered public accounting firm engaged by us;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-indent: -0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-indent: -0.5in"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt"></p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
    <td style="width: 0.25IN; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">pre-approving all audit and non-audit services to be provided by the independent registered accounting firm or any other registered public accounting firm engaged by us, and establishing pre-approval policies and procedures;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Compensation Committee</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The members of our Compensation
Committee are Messrs. Salvucci Sr., Salvucci, Jr., and Blount. Mr.&#160;Salvucci, Jr. serves as chairman of the Compensation Committee.
Under the NYSE American listing standards and applicable SEC rules, we are required to have at least two members on the Compensation Committee,
all of whom must be independent.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have adopted a compensation
committee charter, which details the principal functions of the compensation committee, including:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
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    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">reviewing and approving the compensation of all of our other executive officers;</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
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    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">reviewing our executive compensation policies and plans;</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
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    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">implementing and administering our incentive compensation equity-based remuneration plans;</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
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    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">assisting management in complying with our proxy statement and annual report disclosure requirements;</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
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    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">approving all special perquisites, special cash payments and other special compensation and benefit arrangements for our executive officers and employees;</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
    <td style="width: 0.25IN; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">producing a report on executive compensation to be included in our annual proxy statement; and</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
    <td style="width: 0.25IN; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">reviewing, evaluating and recommending changes, if appropriate, to the remuneration for directors.</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The charter also provides
that the Compensation Committee may, in its sole discretion, retain or obtain the advice of a compensation consultant, legal counsel or
other adviser and will be directly responsible for the appointment, compensation and oversight of the work of any such adviser. However,
before engaging or receiving advice from a compensation consultant, external legal counsel or any other adviser, the compensation committee
will consider the independence of each such adviser, including the factors required by the NYSE American and the SEC.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Nominating and Corporate Governance Committee</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The members of our Nominating
Committee are Messrs. Blount, Salvucci Sr. and Salvucci Jr. Mr.&#160;Salvucci Jr. serves as chair of Nominating Committee.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The primary purposes of our
Nominating Committee is to assist the board in:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
    <td style="width: 0.25IN; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">identifying, screening and reviewing individuals qualified to serve as directors and recommending to the board of directors candidates for nomination for election at the annual meeting of stockholders or to fill vacancies on the board of directors;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
    <td style="width: 0.25IN; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">developing, recommending to the board of directors and overseeing implementation of our corporate governance guidelines;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
    <td style="width: 0.25IN; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">coordinating and overseeing the annual self-evaluation of the board of directors, its committees, individual directors and management in the governance of the company; and</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
    <td style="width: 0.25IN; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">reviewing on a regular basis our overall corporate governance and recommending improvements as and when necessary.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Nominating Committee is
governed by a charter that complies with the rules of the NYSE American.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">A copy of each of our Nominating
Committee Charter, Compensation Committee Charter, and Audit Committee Charter are accessible at <i>https://EON-R.com /</i>.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Director Nominations</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our Nominating Committee will
recommend to the board of directors candidates for nomination for election at the annual meeting of the stockholders. The board of directors
will also consider director candidates recommended for nomination by our stockholders during such times as they are seeking proposed nominees
to stand for election at the next annual meeting of stockholders (or, if applicable, a special meeting of stockholders).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have not formally established
any specific, minimum qualifications that must be met or skills that are necessary for directors to possess. In general, in identifying
and evaluating nominees for director, the board of directors considers educational background, diversity of professional experience, knowledge
of our business, integrity, professional reputation, independence, wisdom, and the ability to represent the best interests of our stockholders.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Compensation Committee Interlocks and Insider
Participation</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">None of our future executive
officers currently serves, and in the past year has not served, as a member of the board of directors or compensation committee of any
entity that has one or more executive officers serving on our board of directors.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Code of Ethics</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have adopted a Code of
Ethics applicable to our directors, officers and employees. The Code of Ethics is available on our website accessible at <i>https://EON-R.com
/</i>. In addition, a copy of the Code of Ethics will be provided without charge upon request from us. We intend to disclose any amendments
to or waivers of certain provisions of our Code of Ethics in a Current Report on Form&#160;8-K.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Executive Officers</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in">Our executive officers are:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: bottom">
    <td style="border-bottom: black 1.5pt solid"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Name</b></span></td>
    <td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td style="width: 34%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Dante Caravaggio</span></td>
    <td style="width: 1%">&#160;</td>
    <td style="width: 33%; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Chief Executive Officer</span></td>
    <td style="width: 1%">&#160;</td>
    <td style="width: 31%; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">67</span></td></tr>
  <tr style="vertical-align: bottom">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Mitchell B. Trotter</span></td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Chief Financial Officer</span></td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">65</span></td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">David M. Smith</span></td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">General Counsel and Secretary</span></td>
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    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">69</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in">Biographical information for these individuals is set forth
above.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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</div><div><a id="k_013"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Summary Compensation Table</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following table sets forth
information regarding compensation earned during the years ended December 31, 2024 and 2023 by our principal executive officers and our
other most highly compensated executive officers as of the end of December 31, 2024 (&#8220;NEOs&#8221;).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt">&#160;</p><div>

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</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: center; font-weight: bold; border-bottom: Black 1.5pt solid">(a)</td><td style="text-align: center; font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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Awards&#160;<sup>(1)</sup></b></span></td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="text-align: center; font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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 Incentive<br/>
 plan<br/>
 compensation</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="text-align: center; font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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 deferred<br/>
 compensation<br/>

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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left">Chief Executive Officer and President</td><td>&#160;</td>
    <td style="text-align: center">2023</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left">Chief Financial Officer</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
    <td style="text-indent: -0.125in; padding-left: 0.125in">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left"><sup>&#160;</sup></td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -0.125in; padding-left: 0.125in"><span style="font-family: Times New Roman, Times, Serif">Diego Rojas<sup>(5)</sup></span></td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left"><sup>&#160;</sup></td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">108,000</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left">Former Chief Executive Officer</td><td>&#160;</td>
    <td style="text-align: center">2023</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(1)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The fair value of the stock awards to Messrs. Caravaggio, Trotter and Smith were based on the closing price of the Company&#8217;s Class A Common Stock on March 4, 2024 in accordance with FASB ASC 718. </span></td></tr>
  <tr style="vertical-align: top">
    <td>&#160;</td>
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  <tr style="vertical-align: top">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(2)</span></td>
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  <tr style="vertical-align: top">
    <td>&#160;</td>
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  <tr style="vertical-align: top">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(3)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Mr. Orr resigned on November 15, 2023, in connection with the Closing of the Purchase.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(4)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Mr. Goree resigned on November 15, 2023, in connection with the Closing of the Purchase.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(5)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Mr. Rojas resigned on December 17, 2023 to pursue other opportunities.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(6)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Mr. Orr earned other compensation of $64,500 for consulting services and an engagement fee of $25,000.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(7)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Mr. Goree earned other compensation of $33,000 for consulting services and an engagement fee of $50,000.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(8)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Mr. Rojas was paid in other compensation of $12,000 for separation pay.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><!-- Field: Page; Sequence: 109; Value: 1 --><div>
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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt"></p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Narrative Disclosures Regarding Compensation;
Employment Agreements</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">None of our NEOs received
any cash compensation prior to the Closing of the Purchase on November 15, 2023, other than the $10,000 per month, including the deferred
payments, administrative fee for office space, utilities, secretarial and administrative services, and the reimbursement for out-of-pocket&#160;expenses
paid to Rh&#244;ne Merchant Resources Inc., and $5,000 per month paid to Donald W. Orr, no compensation or fees of any kind was paid
to the Sponsor, or members of our management team or their respective affiliates, for services rendered prior to or in connection with
the consummation of our initial business combination.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Dante Caravaggio</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Effective December 18, 2023,
we entered into an employment agreement (the &#8220;Caravaggio Employment Agreement&#8221;) with Dante Caravaggio, pursuant to which he
serves as our Chief Executive Officer, President, and a member of our board of directors. The Caravaggio Employment Agreement is on our
standard form for executives, and provides that we pay to Mr. Caravaggio an annual base salary of $250,000. In addition, we agreed to
issue a one-time Equity Sign-On Incentive to Mr. Caravaggio under the 2023 HNR Acquisition Corp Omnibus Incentive Plan (the &#8220;2023
Plan&#8221;), which consists of restricted stock units (&#8220;RSUs&#8221;), equal to 200% of base salary divided by $10 (i.e. 50,000
RSUs), subject to time-based vesting as follows: 1/3 on the first anniversary of the date of grant, 1/3 on the second anniversary of the
date of grant, and 1/3 on the third anniversary of the date of grant, so long as Mr.&#160;Caravaggio continues to provide service through
such vesting date. The 50,000 RSU&#8217;s were approved by the Board and issued in March of 2024. Mr. Caravaggio will be permitted to
participate in any broad-based retirement, health and welfare plans that will be offered to all of our employees.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the Caravaggio
Employment Agreement, if we terminate Mr. Caravaggio&#8217;s employment without Cause (as defined in the Caravaggio Employment Agreement)
or Mr. Caravaggio terminates his employment for Good Reason (as defined in the Caravaggio Employment Agreement), then Mr. Caravaggio will
be entitled to: (i) any accrued obligations as of the date of termination, including base salary, PTO and holidays, and continued benefits
required by our employee benefit plans; (ii) continued base salary for 12 months following the date of termination, paid in accordance
with our payroll practices; (iii) the total monthly cost of coverage for Mr. Caravaggio and his covered dependents under COBRA, if elected;
and (iv) full vesting in all equity grants as of the date of termination. To receive such severance benefits, Mr. Caravaggio will be required
to execute a non-competition agreement, non-solicitation agreement, or confidentiality agreement or invention assignment agreement and
release of claims.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Mitchell B. Trotter</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Effective November 15, 2023,
we entered into an employment agreement (the &#8220;Trotter Employment Agreement&#8221;) with Mitchell B. Trotter, pursuant to which he
serves as our Chief Financial Officer and a member of our board of directors. The Trotter Employment Agreement is on our standard form
for executives, and provides that we pay to Mr. Trotter an annual base salary of $250,000. In addition, we agreed to issue a one-time
Equity Sign-On Incentive to Mr. Trotter under the 2023 Plan, which consists of RSUs equal to 200% of base salary divided by $10 (i.e.
50,000 RSUs), subject to time-based vesting as follows: 1/3 on the first anniversary of the date of grant, 1/3 on the second anniversary
of the date of grant, and 1/3 on the third anniversary of the date of grant so long as Mr.&#160;Trotter continues to provide service through
such vesting date. The 50,000 RSU&#8217;s were approved by the Board and issued in March of 2024. Mr. Trotter will be permitted to participate
in any broad-based retirement, health and welfare plans that will be offered to all of our employees.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the Trotter Employment
Agreement, if we terminate Mr. Trotter&#8217;s employment without Cause (as defined in the Trotter Employment Agreement) or Mr. Trotter
terminates his employment for Good Reason (as defined in the Trotter Employment Agreement), then Mr. Trotter will be entitled to: (i)
any accrued obligations as of the date of termination, including base salary, PTO and holidays, and continued benefits required by our
employee benefit plans; (ii) continued base salary for 12 months following the date of termination, paid in accordance with our payroll
practices; (iii) the total monthly cost of coverage for Mr. Trotter and his covered dependents under COBRA, if elected; and (iv) full
vesting in all equity grants as of the date of termination. To receive such severance benefits, Mr. Trotter will be required to execute
a non-competition agreement, non-solicitation agreement, or confidentiality agreement or invention assignment agreement and release of
claims.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><!-- Field: Page; Sequence: 110; Value: 1 --><div>
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    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>David M. Smith</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Effective November 15, 2023,
we entered into an employment agreement (the &#8220;Smith Employment Agreement&#8221;) with David M. Smith, pursuant to which he serves
as our General Counsel and Secretary. The Smith Employment Agreement is on our standard form for executives, and provides that we pay
to Mr. Smith an annual base salary of $250,000. In addition, we agreed to issue a one-time Equity Sign-On Incentive to Mr. Smith under
the 2023 Plan, which consists of RSUs equal to 200% of base salary divided by $10 (i.e. 50,000 RSUs), subject to time-based vesting as
follows: 1/3 on the first anniversary of the date of grant, 1/3 on the second anniversary of the date of grant, and 1/3 on the third anniversary
of the date of grant, so long as Mr.&#160;Smith continues to provide service through such vesting date. The 50,000 RSU&#8217;s were approved
by the Board and issued in March of 2024. Mr. Smith will be permitted to participate in any broad-based retirement, health and welfare
plans that will be offered to all of our employees.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the Smith Employment
Agreement, if we terminate Mr. Smith&#8217;s employment without Cause (as defined in the Smith Employment Agreement) or Mr. Smith terminates
his employment for Good Reason (as defined in the Smith Employment Agreement), then Mr. Smith will be entitled to: (i) any accrued obligations
as of the date of termination, including base salary, PTO and holidays, and continued benefits required by our employee benefit plans;
(ii) continued base salary for 12 months following the date of termination, paid in accordance with our payroll practices; (iii) the total
monthly cost of coverage for Mr. Smith and his covered dependents under COBRA, if elected; and (iv) full vesting in all equity grants
as of the date of termination. To receive such severance benefits, Mr. Smith will be required to execute a non-competition agreement,
non-solicitation agreement, or confidentiality agreement or invention assignment agreement and release of claims.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Donald W. Orr</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In 2022, prior to the business
combination, we paid Donald W. Orr $52,500. In 2023, prior to the business combination, we again paid Donald Orr 52,500.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Effective November 15, 2023,
we entered into a Consulting Agreement with Donald W. Orr pursuant to which Mr. Orr will be compensated as follows as our designated Geology
and Acquisition consultant:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify; text-indent: -0.25in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
    <td style="width: 0.25IN"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Initial cash incentive of $25,000, of which $4,500 had been paid as of December 31, 2023, with the balance being accrued; and</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify; text-indent: -0.25in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
    <td style="width: 0.25IN"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A cash consulting retainer fee of $8,000 per month for the first 12&#160;months; and a cash consulting retainer fee of $12,000 per month for the next 24&#160;months, of which $12,000 was paid as of December 31, 2023.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, at the Closing
of the Purchase, we agreed to issue 30,000 RSUs to Mr. Orr, which vest as follows: 1/3 on the first anniversary of the date of grant,
1/3 on the second anniversary of the date of grant, and 1/3 on the third anniversary of the date of grant, so long as Mr.&#160;Orr continues
to provide service through such vesting date. The 30,000 RSU&#8217;s were approved by the Board and issued in March of 2024. Vesting will
accelerate in full upon a termination of the Consulting Agreement by us without cause or by Mr. Orr for good reason.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Donald H. Goree</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In 2023 and 2022, we paid
Rh&#244;ne Merchant Resources Inc., an entity controlled by Mr. Goree, $55,000 and $105,000, respectively, for providing us with office
space, utilities, secretarial and administrative services. This arrangement was solely for our benefit and was not intended to provide
our officers or directors compensation in lieu of a salary.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Effective November 15, 2023,
we entered into a Consulting Agreement with Rh&#244;ne Merchant House, Ltd., an entity of which Donald Goree is the owner and managing
director, pursuant to which Rh&#244;ne Merchant House, Ltd. will be compensated as follows as our designated strategy consultant:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify; text-indent: -0.25in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
    <td style="width: 0.25IN"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Initial cash incentive of $50,000, of which $30,000 had been paid as of December 31, 2023, with the balance being accrued; and</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify; text-indent: -0.25in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
    <td style="width: 0.25IN"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A monthly retainer of $22,000, of which $33,000 was paid as of December 31, 2023.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, at the Closing
of the Purchase, we agreed to issue 60,000 RSUs to Rh&#244;ne Merchant House, Ltd., which vest as follows: 1/3 on the first anniversary
of the date of grant, 1/3 on the second anniversary of the date of grant, and 1/3 on the third anniversary of the date of grant, so long
as Rh&#244;ne Merchant House, Ltd. continues to provide service through such vesting date. The 60,000 RSU&#8217;s were approved by the
Board of Directors and issued in March of 2024to Rh&#244;ne Merchant House, Ltd. Vesting will accelerate in full upon a termination of
the Consulting Agreement by us without cause or by Rh&#244;ne Merchant House, Ltd. for good reason.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Effective May 6, 2024, the
Company and Rh&#244;ne Merchant House, Ltd. entered into a settlement and mutual release agreement pursuant to which the Company agreed
to pay $100,000 in cash, with $50,000 paid on or before execution and the remaining $50,000 by July 24, 2024 in the form of an unsecured
promissory note. The Company also issued 150,000 shares of Class A Common Stock subject to a contractual lockup as final consideration
under the Consulting Agreement, which was deemed terminated effective May 6, 2024.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Diego Rojas </i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Effective November 15, 2023,
we entered into an employment agreement (the &#8220;Rojas Employment Agreement&#8221;) with Diego Rojas, pursuant to which he served as
our Chief Executive Officer and a member of our board of directors until December 17, 2023.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In connection with Mr. Rojas&#8217;
resignation, we entered into a Separation and Release Agreement with Mr. Rojas effective December 17, 2023. Pursuant to such Separation
and Release Agreement, we agreed to pay to Mr. Rojas: (i) his base salary through December 31, 2023; and (ii) $96,000, payable in equal
semi-monthly installments, beginning on January 1, 2024. In addition, we agreed to issue to Mr. Rojas 60,000 shares of our Class A Common
Stock.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Compensation Advisor</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Compensation Committee
retained Pearl Meyer&#160;&amp; Partners, LLC (&#8220;Pearl Meyer&#8221;), a compensation consulting firm, to assist it in evaluating
the elements and levels of our executive compensation, including base salaries, annual cash incentive awards and equity-based incentives
for our executive officers, consultant, and directors. In November&#160;2022, the Compensation Committee determined that Pearl Meyer is
independent from management and that Pearl Meyer&#8217;s work has not raised any conflicts of interest. Pearl Meyer reports directly to
the Compensation Committee and the Compensation Committee has the sole authority to approve Pearl Meyer&#8217;s compensation and may terminate
the relationship at any time.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Outstanding Equity Awards at Fiscal Year End</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>2024 Outstanding Equity Awards at Fiscal Year-end
Table</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following table sets forth
information regarding the outstanding equity awards held by our Named Executive Officers as of December&#160;31, 2024:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"><tr style="vertical-align: bottom"><td style="font: 8pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 1.5pt; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 8pt">&#160;</span></td><td style="font: bold 8pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 8pt">&#160;</span></td>
    <td colspan="17" style="border-bottom: Black 1.5pt solid; font: bold 8pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 8pt">Option
    Awards</span></td><td style="font: bold 8pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 8pt">&#160;</span></td>
    <td colspan="14" style="border-bottom: Black 1.5pt solid; font: bold 8pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 8pt">Stock
    Awards</span></td><td style="font: bold 8pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 8pt">&#160;</span></td></tr>
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    <td style="border-bottom: Black 1.5pt solid; font: bold 8pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 8pt">Name</span></td><td style="font: bold 8pt Times New Roman, Times, Serif; text-align: center; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 8pt">&#160;</span></td>
    <td style="font: bold 8pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 8pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; font: bold 8pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 8pt">Number&#160;of
                                            <br/> Securities <br/> Underlying <br/> Unexercised <br/> Options <br/> (#) <br/> Exercisable</span></td><td style="font: bold 8pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 8pt">&#160;</span></td><td style="font: bold 8pt Times New Roman, Times, Serif; text-align: center; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 8pt">&#160;</span></td>
    <td style="font: bold 8pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 8pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; font: bold 8pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 8pt">Number&#160;of
                                            <br/> Securities <br/> Underlying <br/> Unexercised <br/> Options <br/> (#) <br/> Unexercisable</span></td><td style="font: bold 8pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 8pt">&#160;</span></td><td style="font: bold 8pt Times New Roman, Times, Serif; text-align: center; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 8pt">&#160;</span></td>
    <td style="font: bold 8pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 8pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; font: bold 8pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 8pt">Equity
                                            <br/> Incentive <br/> Plan <br/> Awards: <br/> Number&#160;of <br/> Securities <br/> Underlying
                                            <br/> Unexercised <br/> Unearned <br/> Options <br/> (#)</span></td><td style="font: bold 8pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 8pt">&#160;</span></td><td style="font: bold 8pt Times New Roman, Times, Serif; text-align: center; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 8pt">&#160;</span></td>
    <td style="font: bold 8pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 8pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; font: bold 8pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 8pt">Option
                                            <br/> Exercise <br/> Price <br/> ($)</span></td><td style="font: bold 8pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 8pt">&#160;</span></td><td style="font: bold 8pt Times New Roman, Times, Serif; text-align: center; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 8pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; font: bold 8pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 8pt">Option
    <br/> Expiration <br/> Date</span></td><td style="font: bold 8pt Times New Roman, Times, Serif; text-align: center; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 8pt">&#160;</span></td>
    <td style="font: bold 8pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 8pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; font: bold 8pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 8pt">Number&#160;of
                                            <br/> Shares&#160;or <br/> Units&#160;of <br/> Stock <br/> That&#160;Have <br/> Not&#160;Vested
                                            <br/> (#)</span></td><td style="font: bold 8pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 8pt">&#160;</span></td><td style="font: bold 8pt Times New Roman, Times, Serif; text-align: center; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 8pt">&#160;</span></td>
    <td style="font: bold 8pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 8pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; font: bold 8pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 8pt">Market
                                            <br/> Value&#160;of <br/> Shares&#160;or <br/> Units&#160;of <br/> Stock <br/> That&#160;Have
                                            <br/> Not&#160;Vested <br/> ($)</span></td><td style="font: bold 8pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 8pt">&#160;</span></td><td style="font: bold 8pt Times New Roman, Times, Serif; text-align: center; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 8pt">&#160;</span></td>
    <td style="font: bold 8pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 8pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; font: bold 8pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 8pt">Equity
                                            <br/> Incentive <br/> Plan <br/> Awards: <br/> Number&#160;of <br/> Unearned <br/> Shares, <br/>
                                            Units&#160;or <br/> Other <br/> Rights <br/> That&#160;Have <br/> Not&#160;Vested <br/> (#)</span></td><td style="font: bold 8pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 8pt">&#160;</span></td><td style="font: bold 8pt Times New Roman, Times, Serif; text-align: center; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 8pt">&#160;</span></td>
    <td style="font: bold 8pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 8pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; font: bold 8pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 8pt">Equity
                                            <br/> Incentive <br/> Plan <br/> Awards: <br/> Market <br/> or&#160;Payout <br/> Value&#160;of
                                            <br/> Unearned <br/> Shares, <br/> Units&#160;or <br/> Other <br/> Rights&#160;That <br/> Have&#160;Not
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  <tr style="font: 8pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="font: 8pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 8pt">&#160;</span></td><td style="font: 8pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 8pt">-</span></td><td style="font: 8pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 8pt">&#160;</span></td><td style="font: 8pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 8pt">&#160;</span></td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Option Re-pricings</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have not engaged in any
option re-pricings or other modifications to any of our outstanding equity awards to our NEOs during fiscal years 2023 and 2024.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Payments Upon Termination or Change in Control</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">None of our NEOs are entitled
to receive payments or other benefits upon termination of employment or a change in control.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 112; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->106<!-- Field: /Sequence --></p></div><div>
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    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Retirement Plans</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We do not maintain any deferred
compensation, retirement, pension or profit-sharing plans.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Employee Benefits</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">All of our full-time employees
are eligible to participate in health and welfare plans maintained by us, including:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our NEOs participate in these
plans on the same basis as other eligible employees. We do not maintain any supplemental health and welfare plans for our NEOs.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Nonqualified Deferred Compensation</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our NEOs did not earn any
nonqualified deferred compensation benefits from us during the years 2023 and 2024.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Omnibus Equity Incentive Plan</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On November 15, 2023, we adopted
the 2023 Plan, the material terms of which are described below.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Purpose and Eligibility</i><b>.&#160;</b>The
purpose of the 2023 Plan is (i)&#160;to provide eligible persons with an incentive to contribute to our success and to operate and manage
our business in a manner that will provide for our long-term&#160;growth and profitability and that will benefit our stockholders and
other important stakeholders, including our employees and customers, and (ii)&#160;to provide a means of recruiting, rewarding, and retaining
key personnel.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Equity awards may be granted
under the 2023 Plan to officers, directors, including non-employee&#160;directors, other employees, advisors, consultants or other service
providers of the company or our subsidiaries or other affiliates, and to any other individuals who are approved by the Compensation Committee
as eligible to participate in the 2023 Plan. Only our employees or employees of our corporate subsidiaries are eligible to receive incentive
stock options.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Effective Date and Term<b>.
</b>The 2023 Plan is effective as of November 15, 2023 and will terminate automatically at 11:59PM ET on the&#160;day before the 10<sup>th
</sup>anniversary of the such date, unless earlier terminated by our board of directors or in accordance with the terms of the 2023 Plan.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Administration, Amendment
and Termination<b>. </b>The 2023 Plan will generally be administered by the Compensation Committee. Except where the authority to act
on such matters is specifically reserved to the full board of directors under the 2023 Plan or applicable law, the Compensation Committee
will have full power and authority to interpret and construe all provisions of the 2023 Plan, any award, and any award agreement, and
take all actions and to make all determinations required or provided for under the 2023 Plan, any award, and any award agreement, including
the authority to:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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    <td style="width: 0.5IN">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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    <td style="width: 0.5IN">&#160;</td>
    <td style="width: 0.25IN"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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    <td style="width: 0.5IN">&#160;</td>
    <td style="width: 0.25IN"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
    <td style="width: 0.25IN"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
    <td style="width: 0.25IN"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
    <td style="width: 0.25IN"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
    <td style="width: 0.25IN"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our board of directors is
also authorized to appoint one or more committees of the board of directors consisting of one or more directors who need not meet the
independence requirements under the listing rules of any stock exchange on which Class A Common Stock is listed for certain limited purposes
permitted by the 2023 Plan, and to the extent permitted by applicable law, the Compensation Committee is authorized to delegate authority
to the Chief Executive Officer and/or any other officers of the company for certain limited purposes permitted by the 2023 Plan. Our board
of directors will retain the authority under the 2023 Plan to exercise any or all of the powers and authorities related to the administration
and implementation of the 2023 Plan.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our board of directors may
amend, suspend, or terminate the 2023 Plan at any time; provided that with respect to awards that are granted under the 2023 Plan, no
amendment, suspension or termination may materially impair the rights of the award holder without such holder&#8217;s consent. No such
action may amend the 2023 Plan without the approval of stockholders if the amendment is required to be submitted for stockholder approval
by our board of directors, the terms of the 2023 Plan, or applicable law.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Awards</i><b>.&#160;</b>Awards
under the 2023 Plan may be made in the form of:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
    <td style="width: 0.25IN"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
    <td style="width: 0.25IN"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
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    <td style="width: 0.25IN"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
    <td style="width: 0.25IN"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">An incentive stock option
is an option that meets the requirements of Section&#160;422 of the Internal Revenue Code of 1986, as amended (the &#8220;Code&#8221;),
and a nonqualified stock option is an option that does not meet those requirements. A SAR is a right to receive upon exercise, in the
form of stock, cash or a combination of stock and cash, the excess of the fair market value of one share on the exercise date over the
exercise price of the SAR.&#160;Restricted stock is an award of common stock subject to restrictions over restricted periods that subject
the shares to a substantial risk of forfeiture, as defined in Section&#160;83 of the Code. A restricted stock unit or deferred stock unit
is an award that represents a conditional right to receive shares in the future and that may be made subject to the same types of restrictions
and risk of forfeiture as restricted stock. Dividend equivalent rights are awards entitling the grantee to receive cash, shares, other
awards under the 2023 Plan or other property equal in value to dividends or other periodic payments paid or made with respect to a specified
number of shares of stock. Performance awards are awards made subject to the achievement of one or more performance goals over a performance
period established by the Compensation Committee. Other equity-based&#160;awards are awards representing a right or other interest that
may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to stock, other than an
option, SAR, restricted stock, restricted stock unit, unrestricted stock, dividend equivalent right, or a performance award.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The 2023 Plan provides that
each award will be evidenced by an award agreement, which may specify terms and conditions of the award that differ from the terms and
conditions that would otherwise apply under the 2023 Plan in the absence of the different terms and conditions in the award agreement.
In the event of any inconsistency between the 2023 Plan and an award agreement, the provisions of the 2023 Plan will control.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Awards under the 2023 Plan
may be granted alone or in addition to, in tandem with, or in substitution or exchange for any other award under the 2023 Plan, other
awards under another compensatory plan of the company or any of our affiliates (or any business entity that has been a party to a transaction
with the company or any of our affiliates), or other rights to payment from the company or any of our affiliates. Awards granted in addition
to or in tandem with other awards may be granted either at the same time or at different times.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Compensation Committee
may permit or require the deferral of any payment pursuant to any award into a deferred compensation arrangement, which may include provisions
for the payment or crediting of interest or dividend equivalent rights, in accordance with rules and procedures established by the Compensation
Committee. Awards under the 2023 Plan generally will be granted for no consideration other than past services by the grantee of the award
or, if provided for in the award agreement or in a separate agreement, the grantee&#8217;s promise to perform future services to the company
or one of our subsidiaries or other affiliates.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Forfeiture; Recoupment</i><b>.
</b>We may reserve the right in an award agreement to cause a forfeiture of the gain realized by a grantee with respect to an award on
account of actions taken by, or failed to be taken by, such grantee in violation or breach of, or in conflict with, any employment agreement,
non-competition&#160;agreement, agreement prohibiting solicitation of employees or clients of the company or any affiliate, confidentiality
obligations with respect to the company or any affiliate, or otherwise in competition with the company or any affiliate, to the extent
specified in such award agreement. If the grantee is an employee and is terminated for &#8220;Cause&#8221; (as defined in the 2023 Plan),
the Compensation Committee may annul the grantee&#8217;s award as of the date of the grantee&#8217;s termination.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, any award granted
pursuant to the 2023 Plan will be subject to mandatory repayment by the grantee to the company to the extent (i)&#160;set forth in the
2023 Plan or in an award agreement, or (ii)&#160;the grantee is or becomes subject to our clawback policy, or any applicable laws which
impose mandatory recoupment.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Shares Subject to the 2023
Plan</i><b>. </b>Subject to adjustment as described below, the maximum number of shares of common stock reserved for issuance under the
2023 Plan is equal to 1,400,000&#160;shares of Class&#160;A Common Stock. The maximum number of shares of Class A Common Stock available
for issuance pursuant to incentive stock options granted under the 2023 Plan will be the same as the total number of shares of Class A
Common Stock reserved for issuance under the 2023 Plan. Shares issued under the 2023 Plan may be authorized and unissued shares, or treasury
shares, or a combination of the foregoing.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Any shares covered by an award,
or portion of an award, granted under the 2023 Plan that are not purchased or forfeited or canceled, or expire or otherwise terminate
without the issuance of shares or are settled in cash in lieu of shares, will again be available for issuance under the 2023 Plan.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Shares subject to an award
granted under the 2023 Plan will be counted against the maximum number of shares reserved for issuance under the 2023 Plan as one share
for every one share subject to such an award. In addition, at least the target number of shares of stock issuable under a performance
award will be counted against the maximum number of shares reserved for issuance under the 2023 Plan as of the grant date, but such number
will be adjusted to equal the actual number of shares of stock issued upon settlement of the performance award to the extent different
from such number initially counted against the share reserve.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The number of shares available
for issuance under the 2023 Plan will not be increased by the number of shares of Class A Common Stock: (i)&#160;tendered or withheld
or subject to an award surrendered in connection with the purchase of shares upon exercise of an option; (ii)&#160;that were not issued
upon the net settlement or net exercise of a stock-settled&#160;SAR, (iii)&#160;deducted or delivered from payment of an award in connection
with our tax withholding obligations; or (iv)&#160;purchased by us with proceeds from option exercises.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Options</i><b>. </b>The
2023 Plan authorizes the Compensation Committee to grant incentive stock options (under Section&#160;422 of the Code) and options that
do not qualify as incentive stock options. An option granted under the 2023 Plan will be exercisable only to the extent that it is vested.
Each option will become vested and exercisable at such times and under such conditions as the Compensation Committee may approve consistent
with the terms of the 2023 Plan. No option may be exercisable more than ten&#160;years after the option grant date, or five&#160;years
after the option grant date in the case of an incentive stock option granted to a &#8220;ten percent stockholder&#8221; (as defined in
the 2023 Plan); provided that, to the extent deemed necessary or appropriate by the Compensation Committee to reflect differences in local
law, tax policy, or custom with respect to any option granted to a grantee who is a foreign national or is a natural person who is employed
outside of the United&#160;States, such option may terminate, and all rights to purchase shares of stock thereunder may cease, upon the
expiration of a period longer than ten (10)&#160;years from the date of grant of such option as the Compensation Committee shall determine.
The Compensation Committee may include in the option agreement provisions specifying the period during which an option may be exercised
following termination of the grantee&#8217;s service. The exercise price of each option will be determined by the Compensation Committee,
provided that the per share exercise price will be equal to or greater than 100% of the fair market value of a share of Class A Common
Stock on the grant date (other than as permitted for substitute awards). If we were to grant incentive stock options to any ten percent
stockholder, the per share exercise price will not be less than 110% of the fair market value of a share of Class A Common Stock on the
grant date.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Incentive stock options and
nonqualified stock options are generally non-transferable, except for transfers by will or the laws of descent and distribution. The Compensation
Committee may, in its discretion, determine that a nonqualified stock option may be transferred to family members by gift or other transfers
deemed not to be for value.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Share Appreciation Rights.
</i>The 2023 Plan authorizes the Compensation Committee to grant SARs that provide the recipient with the right to receive, upon exercise
of the SAR, cash, Class A Common Stock, or a combination of the two. The amount that the recipient will receive upon exercise of the SAR
generally will equal the excess of the fair market value of shares of Class A Common Stock on the date of exercise over the fair market
value of shares of Class A Common Stock on the grant date. SARs will become exercisable in accordance with terms determined by the Compensation
Committee. SARs may be granted in tandem with an option grant or independently from an option grant. The term of a SAR cannot exceed ten
(10)&#160;years from the date of grant. The per share exercise price of a SAR will be no less than the fair market value of one share
of Class A Common Stock on the grant date of such SAR.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">SARs will be nontransferable,
except for transfers by will or the laws of descent and distribution. The Compensation Committee may determine that all or part of a SAR
may be transferred to certain family members of the grantee by gift or other transfers deemed not to be for value.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Fair Market Value.</i><b>&#160;</b>For
so long as the Class A Common Stock remains listed on NYSE American, the fair market value of the Class A Common Stock on an award&#8217;s
grant date, or on any other date for which fair market value is required to be established under the 2023 Plan, will be the closing price
of the Class A Common Stock as reported on NYSE American on such date. If there is no such reported closing price on such date, the fair
market value of the Class A Common Stock will be the closing price of the Class A Common Stock as reported on such market on the next
preceding date on which any sale of Class A Common Stock will have been reported.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If the Class A Common Stock
ceases to be listed on NYSE American and is listed on another established national or regional stock exchange, or traded on another established
securities market, fair market value will similarly be determined by reference to the closing price of the Class A Common Stock on the
applicable date as reported on such other stock exchange or established securities market.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If the Class A Common Stock
ceases to be listed on NYSE American or another established national or regional stock exchange, or traded on another established securities
market, the Compensation Committee will determine the fair market value of the Class A Common Stock by the reasonable application of a
reasonable valuation method in a manner consistent with Section&#160;409A of the Code.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>No Repricing</i><b>. </b>Except
in connection with a corporate transaction involving the company (including, without limitation, any stock dividend, distribution (whether
in the form of cash, shares of stock, other securities or other property), stock split, extraordinary dividend, recapitalization, change
in control, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of shares of stock or other
securities or similar transaction), we may not, without obtaining stockholder approval, (a)&#160;amend the terms of outstanding options
or SARs to reduce the exercise price of such outstanding options or SARs, (b)&#160;cancel outstanding options or SARs in exchange for,
or in substitution of, options or SARs with an exercise price that is less than the exercise price of the original options or SARs, (c)&#160;cancel
outstanding options or SARs with an exercise price above the current price of Class A Common Stock in exchange for cash or other securities,
in each case, unless such action is (i)&#160;subject to and approved by our stockholders or (ii)&#160;would not be deemed to be a repricing
under the rules of any stock exchange or securities market on which the Class A Common Stock is listed or publicly traded.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Restricted Stock; Restricted
Stock Units. </i>The 2023 Plan authorizes the Compensation Committee to grant restricted stock and restricted stock units. Subject to
the provisions of the 2023 Plan, the Compensation Committee will determine the terms and conditions of each award of restricted stock
and restricted stock units, including the restricted period for all or a portion of the award, the restrictions applicable to the award,
and the purchase price, if any, for the shares of stock subject to the award. The restrictions, if any, may lapse over a specified period
of time or through the satisfaction of conditions, in installments or otherwise, as the Compensation Committee may determine. A grantee
of restricted stock will have all of the rights of a stockholder as to those shares, including, without limitation, the right to vote
the shares and receive dividends or distributions on the shares, except to the extent limited by the Compensation Committee. The Compensation
Committee may provide in an award agreement evidencing a grant of restricted stock that (a)&#160;cash dividend payments or distributions
paid on restricted stock will be reinvested in shares of stock, which may or may not be subject to the same vesting conditions and restrictions
as applicable to such shares of restricted stock or (b)&#160;any dividend payments or distributions declared or paid on shares of restricted
stock will only be made or paid upon satisfaction of the vesting conditions and restrictions applicable to such shares of restricted stock.
Dividend payments or distributions declared or paid on shares of restricted stock which vest or are earned based on upon the achievement
of performance goals will not vest unless such performance goals for such shares of restricted stock are achieved, and if such performance
goals are not achieved, the grantee of such shares of restricted stock will promptly forfeit and, to the extent already paid or distributed,
repay to us such dividend payments or distributions. Grantees of restricted stock units and deferred stock units will have no voting or
dividend rights or other rights associated with share ownership, although the Compensation Committee may award dividend equivalent rights
on such units.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">During the restricted period,
if any, when restricted stock and restricted stock units are non-transferable&#160;or forfeitable, a grantee is prohibited from selling,
transferring, assigning, pledging, exchanging, hypothecating, or otherwise encumbering or disposing of the grantees&#8217; restricted
stock and restricted stock units.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Dividend Equivalent Rights.
</i>The 2023 Plan authorizes the Compensation Committee to grant dividend equivalent rights. Dividend equivalent rights may be granted
independently or in connection with the grant of any equity-based&#160;award, except that no dividend equivalent right may be granted
in connection with, or related to an option or SAR.&#160;Dividend equivalent rights may be paid currently (with or without being subject
to forfeiture or a repayment obligation) or may be deemed to be reinvested in additional shares of stock or awards which may thereafter
accrue additional dividend equivalent rights (with or without being subject to forfeiture or a repayment obligation) and may be payable
in cash, common shares, or a combination of the two. Dividend equivalent rights granted as a component of another award may (a)&#160;provide
that such dividend equivalent right will be settled upon exercise, settlement, or payment of, or lapse of restriction on, such other award
and that such dividend equivalent will expire or be forfeited or annulled under the same conditions as such award or (b)&#160;contain
terms and conditions which are different from the terms and conditions of such other award, provided that dividend equivalent rights credited
pursuant to a dividend equivalent right granted as a component of another award which vests or is earned based on the achievement of performance
goals will not vest unless such performance goals for such underlying award are achieved, and if such performance goals are not achieved,
the grantee of such dividend equivalent right will promptly forfeit and, to the extent already paid or distributed, repay to us payments
or distributions made in connection with such dividend equivalent rights.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Performance Awards</i><b>.
</b>The 2023 Plan authorizes the Compensation Committee to grant performance awards. The Compensation Committee will determine the applicable
performance period, the performance goals, and such other conditions that apply to the performance award. Any performance measures may
be used to measure the performance of the company and our subsidiaries and other affiliates as a whole or any business unit of the company,
our subsidiaries, and/or our affiliates or any combination thereof, as the Compensation Committee may deem appropriate, or any performance
measures as compared to the performance of a group of comparable companies, or published or special index that the Compensation Committee
deems appropriate. Performance goals may relate to our financial performance or the financial performance of our operating units, the
grantee&#8217;s performance, or such other criteria determined by the Compensation Committee. If the performance goals are met, performance
awards will be paid in cash, shares of stock, other awards, or a combination thereof.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Other Equity-Based&#160;Awards.</i><b>&#160;</b>The
2023 Plan authorizes the Compensation Committee to grant other types of stock-based&#160;awards under the 2023 Plan. The terms and conditions
that apply to other equity-based&#160;awards are determined by the Compensation Committee.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Forms of Payment.</i> The
exercise price for any option or the purchase price (if any) for restricted stock, and vested restricted stock units is generally payable
(i)&#160;in cash or in cash equivalents acceptable to the company, (ii)&#160;to the extent the award agreement provides, by the tender
(or attestation of ownership) of shares of Class A Common Stock having a fair market value on the date of tender (or attestation) equal
to the exercise price or purchase price, (iii)&#160;to the extent permitted by law and to the extent permitted by the award agreement,
through a broker-assisted&#160;cashless exercise, or (iv)&#160;to the extent the award agreement provides and/or unless otherwise specified
in an award agreement, any other form permissible by applicable law, including net exercise or net settlement and service rendered to
us or our affiliates.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Change in Capitalization.</i>
The Compensation Committee may adjust the terms of outstanding awards<i>&#160;</i>under the 2023 Plan to preserve the proportionate interests
of the holders in such awards on account of any recapitalization, reclassification, share split, reverse share split, spin-off, combination
of share, exchange of shares, share dividend or other distribution payable in capital shares, or other increase or decrease in such shares
effected without receipt of consideration by the company. The adjustments will include proportionate adjustments to (i)&#160;the number
and kind of shares subject to outstanding awards and (ii)&#160;the per share exercise price of outstanding options or SARs.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Transaction not Constituting
a Change in Control. </i>If the company is the surviving entity in any reorganization, merger, or consolidation with one or more other
entities which does not constitute a &#8220;change in control&#8221; (as defined in the 2023 Plan), any awards will be adjusted to pertain
to and apply to the securities to which a holder of the number of common shares subject to such award would have been entitled immediately
after such transaction, with a corresponding proportionate adjustment to the per share price of options and SARs so that the aggregate
price per share of each option or SAR thereafter is the same as the aggregate price per share of each option or SAR subject to the option
or SAR immediately prior to such transaction. Further, in the event of any such transaction, performance awards (and the related performance
measures if deemed appropriate by the Compensation Committee) will be adjusted to apply to the securities that a holder of the number
of Class A Common Stock subject to such performance awards would have been entitled to receive following such transaction.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Effect of a Change in Control
in which Awards are not Assumed.</i> Except as otherwise provided in the applicable award agreement, in another agreement with the grantee,
or as otherwise set forth in writing, upon the occurrence of a change in control in which outstanding awards are not being assumed or
continued, the following provisions will apply to such awards, to the extent not assumed or continued:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify; text-indent: -0.25in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
    <td style="width: 0.25IN"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For performance awards, if less than half of the performance period has lapsed, such awards will be treated as though the target performance thereunder has been achieved. If at least half of the performance period has lapsed, such performance awards will be earned, as of immediately prior to but contingent on the occurrence of such change in control, based on the greater of (i)&#160;deemed achievement of target performance or (ii)&#160;determination of actual performance as of a date reasonably proximate to the date of consummation of the change in control as determined by the Compensation Committee, in its sole discretion.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
    <td style="width: 0.25IN"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Effect of a Change in Control
in which Awards are Assumed.</i><b>&#160;</b>Except as otherwise provided in the applicable award agreement, in another agreement with
the grantee, or as otherwise set forth in writing, upon the occurrence of a change in control in which outstanding awards are being assumed
or continued, the following provisions will apply to such awards, to the extent not assumed or continued: The 2023 Plan and the options,
SARs, restricted stock, restricted stock units, dividend equivalent rights, and other equity-based&#160;equity awards granted under the
2023 Plan will continue in the manner and under the terms so provided in the event of any change in control to the extent that provision
is made in writing in connection with such change in control for the assumption or continuation of such awards, or for the substitution
for such awards of new options, SARs, restricted stock, restricted stock units, dividend equivalent rights, and other equity-based&#160;awards
relating to the capital stock of a successor entity, or a parent or subsidiary thereof, with appropriate adjustment as to the number of
shares and exercise price of options and SARs.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In general, a &#8220;change
in control&#8221; means:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
    <td style="width: 0.25IN"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">a transaction or series of related transactions whereby a person or group (other than the company or any of our affiliates) becomes the beneficial owner of 50% or more of the total voting power of our voting stock on a fully diluted basis;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
    <td style="width: 0.25IN"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">individuals who constitute our board of directors, cease to constitute a majority of the members of our board of directors then in office;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
    <td style="width: 0.25IN"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
    <td style="width: 0.25IN"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Compensation of Directors</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>2024 Director Compensation Table</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following Director Compensation
Table sets forth information concerning compensation for services rendered by our independent directors for fiscal year 2024.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Name</b></p></td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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in Cash <br/>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">27,000</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">139,200</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">&#160;&#160;&#160;&#160;&#160;&#160;-</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; text-indent: -10pt; padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Joseph Salvucci, Jr.<sup>(2)</sup></span></td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">143,040</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -10pt; padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Joseph Salvucci, Sr. <sup>(3)</sup></span></td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; ">
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    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">81,000</td><td style="padding-bottom: 4pt; text-align: left">&#160;</td><td style="padding-bottom: 4pt">&#160;</td>
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    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">5,025</td><td style="padding-bottom: 4pt; text-align: left">&#160;</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">517,065</td><td style="padding-bottom: 4pt; text-align: left">&#160;</td></tr>
  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 24pt; text-align: justify; text-indent: 0pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.25in; text-align: left">(1)</td><td style="text-align: justify">Mr. Blount was appointed to serve as a member of the Board
of Directors in November 2023.</td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 6.75pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.25in; text-align: left">(2)</td><td style="text-align: justify">Mr.&#160;Salvucci, Jr. was appointed to serve as a member
of the Board of Directors in December 2021.</td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.25in; text-align: left">(3)</td><td style="text-align: justify">Mr.&#160;Salvucci, Sr. was appointed to serve as a member
of the Board of Directors in December 2021.</td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Messrs. Caravaggio and Trotter
have not been included in the Director Compensation Table because there were NEOs of our company for all of our 2024 fiscal year, and
all compensation paid to each of them during our 2024 fiscal year is reflected in the Summary Compensation Table above.]</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Director Compensation Program</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We believe that attracting
and retaining qualified directors is critical to our ability to grow in a manner that is consistent with our corporate governance principles
and that is designed to create value for stockholders. We also believe that structuring director compensation with a significant equity
component is key to achieving our goals. We believe that this structure will also allow directors to carry out their responsibilities
with respect to oversight of the Company while also maintaining alignment with stockholder interests and fiduciary obligations. We anticipate
that embedding these core principles and values of alignment and solid governance will enhance our ability to grow and unlock value for
stockholders. We have implemented a director compensation policy for our non-employee&#160;directors, which is consists of:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -24pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
    <td style="width: 0.25IN"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -24pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
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    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">An annual grant for non-employee&#160;directors of RSUs, calculated by dividing $75,000 by the then current-stock price, which will vest on the first anniversary of the grant;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -24pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
    <td style="width: 0.25IN"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">An additional annual retainer payment of $50,000 to the Chairman; $25,000 to the Chair of the Audit Committee; $20,000 to the Chair of the Compensation Committee; and $15,000 to the Chair of the Nominating Committee.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->113<!-- Field: /Sequence --></p></div><div>
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    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><div><a id="k_014"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>BENEFICIAL OWNERSHIP OF SECURITIES</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following table sets forth
information known to us regarding the beneficial ownership of Class A Common Stock as of January 15, 2025 (the &#8220;Beneficial Ownership
Date&#8221;) by:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
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    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">each person who is the beneficial owner of more than 5% of the outstanding shares of Class A Common Stock;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
    <td style="width: 0.25IN; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">each of the Company&#8217;s named executive officers and directors; and</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Beneficial ownership is determined
according to the rules of the SEC, which generally provide that a person has beneficial ownership of a security if he, she or it possesses
sole or shared voting or investment power over that security. Under those rules, beneficial ownership includes securities that the individual
or entity has the right to acquire, such as through the exercise of warrants or stock options or the vesting of restricted stock units,
within 60 days of the Beneficial Ownership Date. Shares subject to warrants or options that are currently exercisable or exercisable within
60 days of the Beneficial Ownership Date or subject to restricted stock units that vest within 60 days of the Beneficial Ownership Date
are considered outstanding and beneficially owned by the person holding such warrants, options or restricted stock units for the purpose
of computing the percentage ownership of that person but are not treated as outstanding for the purpose of computing the percentage ownership
of any other person. Shares issuable pursuant to the exchange of OpCo Class B Units listed in the table below are represented in shares
of Class A Common Stock.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Except as described in the
footnotes below and subject to applicable community property laws and similar laws, the Company believes that each person listed above
has sole voting and investment power with respect to such shares.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The beneficial ownership of
our securities is based on (i)&#160;12,895,544 shares of Class&#160;A Common Stock issued and outstanding as of the Beneficial Ownership
Date, and (ii)&#160;500,000 shares of Class&#160;B Common Stock issued and outstanding as of the Beneficial Ownership Date.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;<span style="font-size: 8pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom">
    <td style="font-style: italic">Directors and officers:</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Mitchell B.&#160;Trotter<sup>(6)</sup></span></td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-left: 9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">David M.&#160;Smith<sup>(7)</sup></span></td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">3,642,220</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">24.7</td><td style="text-align: left">%</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="font-style: italic; text-align: left">Five Percent Holders:</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">JVS Alpha Property, LLC<sup>(8)</sup></span></td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">2,026,762</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">14.3</td><td style="text-align: left">%</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-left: 9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">HNRAC Sponsors LLC<sup>(9)</sup></span></td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">501,406</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">3.6</td><td style="text-align: left">%</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pogo Royalty, LLC<sup>(10)</sup></span></td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">11.7</td><td style="text-align: left">%</td></tr>
  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Steve Wright<sup>(12)</sup></span></td><td>&#160;</td>
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  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 8pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">*</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Less than one percent (1%)</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 8pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0.35in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(1)</span></td>
    <td style="text-indent: 0in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Unless otherwise noted, the business address of each of the following entities or individuals is 3730 Kirby Drive, Suite 1200, Houston, Texas 77098.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 8pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><!-- Field: Page; Sequence: 120; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->114<!-- Field: /Sequence --></p></div><div>
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    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 8pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0.35in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(2)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Consists of (1) 73,139 shares of Class A Common Stock held by Mr. Blount, (2) 37,500 shares of Class A Common Stock underlying 50,000 warrants held by Mr. Blount and (3) 49,167 shares underlying vested RSUs.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 8pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0.35in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(3)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Consists of (1)&#160;1,400 shares of Class A Common Stock held by Mr. Caravaggio, (2) 460,040 shares of Class&#160;A Common Stock held by Dante Caravaggio, LLC, of which Mr.&#160;Caravaggio has voting and dispositive control over the shares held by such entity, (3)&#160;89,000 shares of Class&#160;A Common Stock held by Alexandria VMA Capital, LLC, of which Mr.&#160;Caravaggio&#8217;s son has voting and dispositive control over the shares held by such entity, (4)&#160;141,750 shares of Class&#160;A Common Stock underlying 189,000 warrants held by Dante Caravaggio, LLC, (5) 100,000 shares of Class A Common Stock held by Donna Caravaggio, the wife of Mr. Caravaggio (6) 13,000 shares underlying vested RSUs, and (7) 25,000 shares underlying vested common stock options.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 8pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0.35in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(4)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Consists of 1,276,762 shares of Class&#160;A Common Stock held by JVS Alpha Property, LLC, over which Mr.&#160;Salvucci, Sr. has voting and dispositive control and 50,833 shares underlying vested RSUs.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 8pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0.35in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(5)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Consists of (1)&#160;132,784 shares of Class&#160;A Common Stock held directly by Mr. Salvucci, Jr., (2) 750,000 shares of Class&#160;A Common Stock underlying 1,000,000 warrants held by JVS Alpha Property, LLC, over which Mr.&#160;Salvucci, Jr. has voting and dispositive control and (4) 49,833 shares underlying vested RSUs.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 8pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0.35in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(6)</span></td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 8pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0.35in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(7)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Consists of (1) 152,500 shares of Class A Common Stock held directly by Mr. Smith, (2) 10,781 shares of Class A Common Stock underlying warrants held by Mr. Smith, (3) 13,000 shares underlying vested RSUs, and (4) 16,667 shares underlying stock options vesting on March 12, 2025.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 8pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0.35in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(8)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">JVS Alpha Property, LLC&#8217;s Manager is Joseph V. Salvucci, Jr., who has voting and dispositive control over the shares held by such entity. The business address for this holder is 583 Epsilon Drive, Pittsburgh, PA 15238.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 8pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0.35in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(9)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Don Orr, as Manager of HNRAC Sponsors LLC, has voting and dispositive control over the securities held by such entity, however he disclaims any beneficial ownership of such shares. Includes the assumption that 378,750 shares of Class&#160;A Common Stock underlying 490,625 warrants held by HNRAC Sponsors LLC have been issued.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 8pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0.35in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(10)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Consists of (1)&#160;1,800,000 shares of Class&#160;B Common Stock, and (2)&#160;201,022 shares of Class&#160;A Common Stock. Fouad Bashour, Amir Yoffe, Michael Rawlings and Marshall Payne have voting and dispositive control over the securities held by such entity. Does not include any Class&#160;B Common Stock upon conversion of preferred units of HNRA Upstream LLC, due to conversion only occurring on November&#160;15, 2025. The address of Messrs. Bashour, Yoffe, Rawlings and Payne is 3879 Maple Avenue, Suite&#160;400, Dallas, Texas 75219 and the telephone number at that address is&#160;214-871-6812.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 8pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0.35in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(11)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Mr.&#160;Gor&#233;e has sole voting and dispositive control over the securities held by Rhone Merchant House Ltd, which indirectly holds 367,969 private placement shares and 367,969&#160;warrants by virtue of its 75% ownership in HNRAC Sponsors LLC, which owns 505,000 private placement shares. Includes the assumption that 378,750 shares of Class&#160;A Common Stock underlying 490,625&#160;warrants held by HNRAC Sponsors LLC have been issued. The business address of Rhone Merchant House Ltd. is 81 Rue de France, 5<sup>TH</sup> Floor, Nice, France 06000.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 8pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0.35in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(12)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Consists of 1,500,000 shares of Class A Common Stock underlying 2,000,000 warrants held by Mr. Wright. The business address of Mr.&#160;Wright is 1121 Boyce Rd, Suite 400, Pittsburgh, PA&#160;15241.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 8pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><div><a id="k_015"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>MARKET PRICES AND DIVIDENDS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Market Price of Our Class A Common Stock</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our Class A Common Stock and
Public Warrants are currently listed on the NYSE American under the symbol &#8220;EONR and &#8220;EONR WS&#8221;, respectively.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On January 15, 2025, the closing
sale price of our Class A Common Stock was $1.09 per share.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As of January 15, 2025, there
were 43 holders of record of our Class A Common Stock and there were 1 holder of record of our Class B Common Stock. The number of record
holders was determined from the records of our transfer agent and does not include beneficial owners of our shares of Class A Common Stock
whose shares are held in the names of various security brokers, dealers and registered clearing agencies.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Dividend Philosophy</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our board of directors has
not adopted a formal dividend policy for a recurring fixed dividend payment to shareholders. We have not paid any cash dividends on our
Class A Common Stock to date. The payment of cash dividends in the future will be dependent upon our revenues and earnings, if any, capital
requirements and general financial condition subsequent to completion of a business combination. The payment of any cash dividends in
the future will be within the discretion of our board of directors at such time. In addition, our board of directors is not currently
contemplating and does not anticipate declaring any stock dividends in the foreseeable future. Further, if we incur any indebtedness,
our ability to declare dividends may be limited by restrictive covenants we may agree to in connection therewith.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt"></p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><div><a id="k_016"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Other than compensation arrangements
for our named executive officers and directors, we describe below each transaction or series of similar transactions, since January 1,
2023, to which we were a party or will be a party, in which:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
    <td style="width: 0.25IN; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the amounts involved exceeded or will exceed $120,000; and</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
    <td style="width: 0.25IN; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">any of our directors, executive officers or holders of more than 5% of our capital stock, or any member of the immediate family of the foregoing persons, had or will have a direct or indirect material interest.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">See &#8220;<i>Compensation
of Executive Officers and Directors</i>&#8221; for a description of certain arrangements with our executive officers and directors.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Related Party Loans and Costs</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, in order to finance
transaction costs in connection with an intended initial business combination, the Sponsor or an affiliate of the Sponsor, or certain
of our officers and directors loaned us funds (&#8220;Working Capital Loans&#8221;).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">During&#160;2023, we received
an additional $5,305,000 in cash proceeds from existing investors of the company, officers and directors and entered into various note
and warrant purchase agreements.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In March 2024, we&#160;issued
100,000&#160;warrants&#160;to our Vice President of Finance and Administration having terms substantially similar to the private placement
warrants in connection with the receipt of&#160;$100,000&#160;in cash&#160;and the issuance of a promissory note.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In March 2024, we&#160;issued
100,000&#160;warrants&#160;to our Chief Financial Officer having terms substantially similar to the private placement warrants in connection
with the receipt of&#160;$100,000&#160;in cash&#160;and the issuance of a promissory note.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In April 2024, we&#160;issued
100,000&#160;warrants&#160;to our Chief Financial Officer having terms substantially similar to the private placement warrants in connection
with the receipt of&#160;$100,000&#160;in cash&#160;and the issuance of a promissory note.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In May 2024, we issued 100,000
warrants to a stockholder controlled by a director having terms substantially similar to the private placement warrants in connection
with the receipt of $100,000 in cash and the issuance of a promissory note.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Administrative Service Agreement</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Company agreed to pay
$10,000 a month for office space, utilities and secretarial support provided by Rhone Merchant Resources Inc. (formerly known as Houston
Natural Resources, Inc.), an affiliate of the Sponsor. The administrative services commenced on the date the securities were first listed
on NYSE American and terminated upon the Closing of the Purchase. The Company paid $30,000 under this agreement during the six&#160;months
ended June&#160;30, 2023, and owes the Sponsor $35,000 as of June&#160;30, 2023.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Founder Pledge Agreement</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In connection with the Closing,
we entered into the Founder Pledge Agreement with the Founders whereby, in consideration of placing the Trust Shares into escrow and entering
into the Backstop Agreement, we agreed: (a) by January 15, 2024, to issue to the Founders an aggregate number of newly issued shares of
Class A Common Stock equal to 10% of the number of Trust Shares; (b) by January 15, 2024, to issue to the Founders a number of warrants
to purchase an aggregate number of shares of Class A Common Stock equal to 10% of the number of Trust Shares, which such warrants shall
be exercisable for five years from issuance at an exercise price of $11.50 per shares; (c) if the Backstop Agreement is not terminated
prior to the Lockup Expiration Date, to issue an aggregate number of newly issued shares of Class A Common Stock equal to (i) (A) the
number of Trust Shares, <i>divided by </i>(B) the simple average of the daily VWAP of the Class A Common Stock during the five (5) Trading
Days prior to the date of the termination of the Backstop Agreement, subject to a minimum of $6.50 per share, <i>multiplied by </i>(C)
a price between $10.00-$13.00 per share (as further described in the Founder Pledge Agreement), <i>minus </i>(ii) the number of Trust
Shares; and (d) following the purchase of OpCo Preferred Units by a Founder pursuant to the Put Right, to issue a number of newly issued
shares of Class A Common Stock equal to the number of Trust Shares sold by such Founder. Until the Founder Pledge Agreement is terminated,
the Founders are not permitted to engage in any transaction which is designed to sell short the Class&#160;A Common Stock or any of our
other publicly traded securities.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the Founder Pledge
Agreement, the Company issued (i) 94,000 shares of Class A Common Stock to JVS Alpha Property, LLC, an entity controlled by Joseph Salvucci,
Jr., a member of our Board of Directors, (ii) 2,500 shares of Class A Common Stock to Byron Blount, a member of our Board of Directors,
and (iii) 30,000 shares of Class A Common Stock to Dante Caravaggio, LLC, an entity controlled by Dante Caravaggio, our Chief Executive
Officer, President, and member of our Board of Directors.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Exchange Agreements</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On November 13, 2023, we entered
into exchange agreements (&#8220;Exchange Agreements&#8221;) with certain holders (the &#8220;Noteholders&#8221;) of promissory notes
issued us for working capital purposes which accrued interest at a rate of 15% per annum (the &#8220;Notes&#8221;). Pursuant to the Exchange
Agreements, we agreed to exchange, in consideration of the surrender and termination of the Notes in an aggregate principal amount (including
interest accrued thereon) of $2,257,771, for 451,563 shares of Common Stock at a price per share equal to $5.00 per share. The Noteholders
include JVS Alpha Property, LLC, a company which is controlled by Joseph Salvucci, Jr., member of our Board of Directors, Dante Caravaggio,
LLC, a company which is controlled by Dante Caravaggio, our Chief Executive Officer, President, and member of our Board of Directors,
Byron Blount, a member of our Board of Directors, and Mitchell B. Trotter, our Chief Financial Officer and a member of our Board of Directors.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Other</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On February 14, 2023, we entered
into a consulting agreement with Donald Orr, our former President, which became effective upon the closing of the MIPA for a term of three
years. Under the agreement, we will pay Mr. Orr&#160;an initial cash amount of $25,000, an initial award of 60,000 shares of common stock,
a monthly payment of $8,000 for the first year of the agreement and $12,000 per month for the remaining two years, and two grants, each
consisting of restricted stock units (&#8220;RSUs&#8221;) calculated by dividing $150,000 by the stock price on the one year and two year
anniversary of the initial Business Combination. Each of the RSU awards will vest upon the one year and two year anniversary of the grants.
In the event of termination of Mr. Orr without cause, Mr. Orr will be entitled to 12 months of the monthly payment in effect at that time,
and the RSU awards issued to Mr. Orr shall fully vest. The shares of common stock were approved by the Board and issued in March of 2024.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In connection with a Referral
Fee and Consulting Agreement (the &#8220;Consulting Agreement&#8221;) by and between us and Alexandria VMA Capital, LLC, an entity controlled
by Dante Caravaggio, our Chief Executive Officer, President, and member of our Board of Directors (&#8220;Consultant&#8221;), we issued
89,000 shares of Class A Common Stock to Consultant in connection with the closing of the Purchase as consideration for services rendered
with a value of $900,000. The Consultant also earned an additional $900,000 transaction fee, of which the Company owes $762,000 as of
December 31, 2023.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On February 15, 2023, we entered
into a consulting agreement with Rh&#244;ne Merchant House, Ltd. (&#8220;RMH Ltd&#8221;), a company control by our former Chairman and
CEO Donald H. Goree, which became effective upon the closing of the MIPA for a term of three years. Under the agreement, the Company will
pay to RMH Ltd&#160;an initial cash amount of $50,000, an initial award of 60,000 shares of common stock, a monthly payment of $22,000,
and two grants, each consisting of RSUs calculated by dividing $250,000 by the stock price on the one year and two year anniversary of
the initial Business Combination. Each of the RSU awards will vest upon the one year and two year anniversary of the grants. In the event
of termination of RMH Ltd. without cause, RMH Ltd. will be entitled to $264,000, and the RSU awards issued to RMH Ltd. shall fully vest.
The shares of common stock were approved by the Board of Directors and issued in March of 2024. Effective May 6, 2024, the Company and
Rh&#244;ne Merchant House, Ltd. entered into a settlement and mutual release agreement pursuant to which the Company agreed to pay $100,000
in cash, with $50,000 paid on or before execution and the remaining $50,000 by July 24, 2024 in the form of an unsecured promissory note.
The Company also agreed to issue 150,000 shares of Class A Common Stock subject to a contractual lockup as final consideration under the
Consulting Agreement, which was deemed terminated effective May 6, 2024.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In October 2024, we issued
27,963 shares of Class A Common Stock (the &#8220;Pledge Shares&#8221;) issued to Dante Caravaggio, Mitch Trotter, David Smith, Byron
Blount, and Jesse Allen (our VP of Operations) in connection with their agreement to pledge equity in favor of First International Bank
&amp; Trust (&#8220;FIBT&#8221;).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In October 2024, we issued
50,000 shares of Class A Common Stock to Mark Williams in connection with the forgiveness of $50,000 of accounts payable due to him for
his services as a consultant prior to our initial business combination.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><div><a id="k_017"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>SELLING SECURITYHOLDERS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">This prospectus relates to
the resale of an aggregate of 5,079,050 shares of our Class A Common Stock consisting of (i) up to 5,000,000 shares of Class A Common
Stock that we may sell to White Lion, from time to time at our sole discretion, pursuant to the Common Stock Purchase Agreement, (ii)
69,050 Exchange Shares, and (iii) 10,000 Service Shares</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We issued, or will issue,
all of the shares that may be sold hereunder in connection with the following transactions:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
    <td style="width: 0.25IN"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">See the section above entitled &#8220;<i>White Lion Committed Equity Financing</i>&#8221; for a description of the transactions with White Lion.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following table sets forth
information with respect to the maximum number of shares of Class A Common Stock beneficially owned by the Selling Securityholders named
below and as adjusted to give effect to the sale of the shares offered hereby. The shares beneficially owned have been determined in accordance
with rules promulgated by the Securities and Exchange Commission, and the information is not necessarily indicative of beneficial ownership
for any other purpose. The information in the table below is current as of January 15, 2025. All information contained in the table below
is based upon information provided to us by the Selling Securityholders and we have not independently verified this information. The Selling
Securityholders are not making any representation that any shares covered by the prospectus will be offered for sale. The Selling Securityholders
may from time to time offer and sell pursuant to this prospectus any or all of the Class A Common Stock being registered.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Other than in connection with
the transactions listed above, none of the Selling Securityholders has had any material relationship with us within the past three years,
except Integrated Energy Services, Inc. has provided us with other petrophysical evaluation services in the past, and will continue to
provide such services to our company</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The shares of Class A Common
Stock being covered hereby may be sold or otherwise disposed of from time to time during the period the registration statement of which
this prospectus is a part remains effective, by or for the account of the Selling Securityholders. After the date of effectiveness of
the registration statement of which this prospectus forms a part, the Selling Stockholders may have sold or transferred, in transactions
covered by this prospectus, some or all of their common stock.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As explained below under
&#8220;Plan of Distribution,&#8221; we have agreed with the selling shareholder to bear certain expenses (other than broker discounts
and commissions, if any) in connection with the registration statement, which includes this prospectus.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.25IN; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">*</span></td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 34px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(1)</span></td>
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</table><div>

</div><p style="margin: 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="text-align: justify; width: 34px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(2)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Because the Selling Securityholders identified in this table may sell some, all or none of the shares owned by it that are registered under this registration statement, and because, to our knowledge, there are currently no agreements, arrangements or understandings with respect to the sale of any of the shares registered hereunder, no estimate can be given as to the number of shares available for resale hereby that will be held by the Selling Securityholders at the time of this registration statement. Therefore, unless otherwise noted, we have assumed for purposes of this table that the Selling Securityholders will sell all of the shares beneficially owned by it as of January 15, 2025.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 34px">
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  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
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    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Represents 8,000 Exchange Shares.</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
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    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></td></tr>
  <tr style="vertical-align: top">
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    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Represents 8,000 Exchange Shares.</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
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  <tr style="vertical-align: top">
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    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
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    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Represents 45,050 Exchange Shares.</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

</div><!-- Field: Page; Sequence: 126; Value: 1 --><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><div><a id="k_018"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>DESCRIPTION OF SECURITIES</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the Second A&amp;R
Charter, our authorized capital stock consists of 121,000,000 shares, consisting of (i) 100,000,000 shares of Class A Common Stock, (ii)
20,000,000 shares of Class B Common Stock, par value $0.0001 per share, and (iii) 1,000,000 shares of preferred stock, par value $0.0001
per share. The following description summarizes the material terms of our capital stock. Because it is only a summary, it may not contain
all the information that is important to you.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Units</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Public Units</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the Initial Public
Offering, we sold&#160;7,500,000&#160;units at a price of $10.00&#160;per unit (the &#8220;Units&#8221;). Each Unit consisted of one (1)&#160;share
of our common stock, $0.0001 par value and one (1)&#160;warrant to purchase three quarters of one share of common stock. On April&#160;4,
2022, the Units&#160;separated into common stock and warrants, and ceased trading.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Private Placement Units</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Sponsor, together with
such other members, if any, of our executive management, directors, advisors or third party investors as determined by the Sponsor in
its sole discretion, purchased, in the aggregate, 505,000&#160;units (&#8220;Private Placement Units&#8221;) at a price of $10.00 per
Private Placement Unit in a private placement which included a share of common stock and warrant to purchase three quarters of one share
of common stock at an exercise price of $11.50 per share, subject to certain adjustments (&#8220;Private Placement Warrants&#8221; and
together, the &#8220;Private Placement&#8221;) that occurred immediately prior to the Initial Public Offering in such amounts as is required
to maintain the amount in the Trust Account at $10.30 per Unit sold. The Sponsor agreed that if the over-allotment&#160;option was exercised
by the underwriter in full or in part, the Sponsor and/or its designees shall purchase from us additional private placement units on a
pro rata basis in an amount that is necessary to maintain in the trust account $10.30.&#160;Since the over-allotment&#160;was exercised
in full, the Sponsor purchased&#160;505,000&#160;Private Placement Units. The purchase price of the Private Placement Units&#160;was added
to the proceeds from the Public Offering to be held in the Trust Account pending completion of the Company&#8217;s initial business combination.
The Private Placement Units&#160;(including the warrants and common stock issuable upon exercise of the Private Placement Units) will
not be transferable, assignable, or salable until 30&#160;days after the completion of the initial business combination and they will
be non-redeemable&#160;so long as they are held by the original holders or their permitted transferees. If the Private Placement Units&#160;are
held by someone other than the original holders or their permitted transferees, the Private Placement Units&#160;will be redeemable by
the Company and exercisable by such holders on the same basis as the Warrants included in the Units&#160;being sold in the Initial Public
Offering. Otherwise, the Private Placement Units&#160;have terms and provisions that are substantially identical to those of the Warrants
sold as part of the Units&#160;in the Initial Public Offering.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Common Stock</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Class A Common Stock</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Holders of record of Class
A Common Stock are entitled to one vote for each share held on all matters to be voted on by stockholders. Unless specified in the Second
A&amp;R Charter or our bylaws, or as required by applicable provisions of the Delaware General Corporation Law (&#8220;DGCL&#8221;) or
applicable stock exchange rules, the affirmative vote of a majority of our common stock (with Class A Common Stock and Class B Common
Stock voting together in one class) that are voted is required to approve any such matter voted on by our stockholders. Our board of directors
is divided into two classes, each of which will generally serve for a term of one year with only one class of directors being elected
in each year. There is no cumulative voting with respect to the election of directors, with the result that the holders of more than 50%
of the shares voted for the election of directors can elect all of the directors. The holders of Class A Common Stock are entitled to
receive ratable dividends when, as and if declared by the board of directors out of funds legally available therefor.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Under Section&#160;211(b)
of the DGCL, we are required to hold an annual meeting of stockholders for the purposes of electing directors in accordance with the bylaws
unless such election is made by written consent in lieu of such a meeting. We did not hold an annual meeting of stockholders to elect
new directors prior to the consummation of the Purchase, and thus we may not be in compliance with Section&#160;211(b) of the DGCL, which
requires an annual meeting.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In the event of a liquidation,
dissolution or winding up of the company, the holders of Class A Common Stock are entitled to share ratably in all assets remaining available
for distribution to them after payment of liabilities and after provision is made for each class of stock, if any, having preference over
the Class A Common Stock. Our stockholders have no preemptive or other subscription rights. There are no sinking fund provisions applicable
to the Class A Common Stock.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-indent: -0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-indent: -0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-indent: -0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Class B Common Stock</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Each share of Class&#160;B
Common Stock has no economic rights but entitles its holder to one vote on all matters to be voted on by stockholders generally. Holders
of shares of Class&#160;A Common Stock and shares of Class&#160;B Common Stock will vote together as a single class on all matters presented
to the stockholders for their vote or approval, except as otherwise required by applicable law or by the Second A&amp;R Charter. We do
not intend to list any shares of Class&#160;B Common Stock on any exchange.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Preferred Stock</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Second A&amp;R Charter
provides that shares of preferred stock may be issued from time to time in one or more series. The Board of Directors is authorized to
fix the voting rights, if any, designations, powers, preferences, the relative, participating, optional or other special rights and any
qualifications, limitations and restrictions thereof, applicable to the shares of each series. The Board of Directors is able to, without
stockholder approval, issue preferred stock with voting and other rights that could adversely affect the voting power and other rights
of the holders of the common stock and could have anti-takeover&#160;effects. The ability of the Board of Directors to issue preferred
stock without stockholder approval could have the effect of delaying, deferring or preventing a change of control of the company or the
removal of existing management. We have no preferred stock outstanding at the date hereof. Although we do not currently intend to issue
any shares of preferred stock, we cannot assure investors that it will not do so in the future.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Warrants</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Public Warrants</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">There are currently 8,625,000
warrants outstanding held by public shareholders (&#8220;Public Warrants&#8221;).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Each Public Warrant entitles
the registered holder to purchase three quarters of one share of Class A Common Stock at a price of $11.50 per share, subject to adjustment
as discussed below, at any time commencing 30 days after the completion of the Purchase. However, no Public Warrants will be exercisable
for cash unless we have an effective and current registration statement covering the shares of Class A Common Stock issuable upon exercise
of the Public Warrants and a current prospectus relating to such shares of Class A Common Stock. Notwithstanding the foregoing, if a registration
statement covering the shares of Class A Common Stock issuable upon exercise of the Public Warrants is not effective within a specified
period following the consummation of the Purchase, Public Warrant holders may, until such time as there is an effective registration statement
and during any period when the Company shall have failed to maintain an effective registration statement, exercise Public Warrants on
a cashless basis pursuant to the exemption provided by Section&#160;3(a)(9) of the Securities Act, provided that such exemption is available.
If that exemption, or another exemption, is not available, holders will not be able to exercise their Public Warrants on a cashless basis.
In the event of such cashless exercise,&#160;each holder&#160;would pay the exercise price by surrendering the Public Warrants for that
number of shares of Class A Common Stock equal to the quotient obtained by dividing (x)&#160;the product of the number of shares of Class
A Common Stock underlying the Public Warrants, multiplied by the difference between the exercise price of the Public Warrants and the
&#8220;fair market value&#8221; (defined below) by (y)&#160;the fair market value. The &#8220;fair market value&#8221; for this purpose
will mean the average reported last sale price of the shares of Class A Common Stock for the 5 trading days ending on the trading day
prior to the date of exercise. The Public Warrants will expire on the fifth anniversary of the completion of the Purchase, at 5:00 p.m.,
New York City time, or earlier upon redemption or liquidation.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We may call the Public Warrant
for redemption, in whole and not in part, at a price of $0.01 per Public Warrant,</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
    <td style="width: 0.25IN"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">at any time after the Public Warrant become exercisable,</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
    <td style="width: 0.25IN"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">upon not less than 30 days&#8217; prior written notice of redemption to each warrant holder,</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
    <td style="width: 0.25IN"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">if, and only if, the reported last sale price of the shares of Class A Common Stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations), for any 20 trading days within a 30 trading day period commencing at any time after the Public Warrants become exercisable and ending on the third business day prior to the notice of redemption to warrant holders; and</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
    <td style="width: 0.25IN"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">if, and only if, there is a current registration statement in effect with respect to the shares of Class A Common Stock underlying such Public Warrants.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The right to exercise will
be forfeited unless the Public Warrants are exercised prior to the date specified in the notice of redemption. On and after the redemption
date, a record holder of a Public Warrants will have no further rights except to receive the redemption price for such holder&#8217;s
Public Warrants upon surrender of such Public Warrant.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The redemption criteria for
our Public Warrants have been established at a price which is intended to provide Public Warrants holders a reasonable premium to the
initial exercise price and provide a sufficient differential between the then- prevailing share price and the Public Warrant exercise
price so that if the share price declines as a result of our redemption call, the redemption will not cause the share price to drop below
the exercise price of the Public Warrants.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If we call the Public Warrants
for redemption as described above, our management will have the option to require all holders that wish to exercise Public Warrants to
do so on a &#8220;cashless basis.&#8221; In such event, each holder would pay the exercise price by surrendering the Public Warrants for
that number of shares of Class A Common Stock equal to the quotient obtained by dividing (x) the product of the number of shares of Class
A Common Stock underlying the Public Warrants, multiplied by the difference between the exercise price of the Public Warrants and the
&#8220;fair market value&#8221; (defined below) by (y) the fair market value. The &#8220;fair market value&#8221; for this purpose shall
mean the average reported last sale price of the shares of Class A Common Stock for the 5 trading days ending on the third trading day
prior to the date on which the notice of redemption is sent to the holders of Public Warrants.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Continental Stock Transfer
&amp; Trust Company, acts as warrant agent for the Public Warrants pursuant to a warrant agreement between Continental Stock Transfer
&amp; Trust and us. The warrant agreement provides that the terms of the Public Warrants may be amended without the consent of any holder
(i) to cure any ambiguity or correct any mistake, including to conform the provisions of the Public Warrant agreement to the description
of the terms of the Public Warrants and the warrant agreement set forth in this prospectus, or to cure, correct or supplement any defective
provision, or (ii) to add or change any other provisions with respect to matters or questions arising under the warrant agreement as the
parties to the warrant agreement may deem necessary or desirable and that the parties deem to not adversely affect the interests of the
registered holders of the Public Warrants. The warrant agreement requires the approval, by written consent or vote, of the holders of
at least 50% of the then outstanding Public Warrants in order to make any change that adversely affects the interests of the registered
holders.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The exercise price and number
of shares of Class A Common Stock issuable on exercise of the Public Warrants may be adjusted in certain circumstances including in the
event of a stock dividend, extraordinary dividend or our recapitalization, reorganization, merger or consolidation. However, except as
described below, the Public Warrants will not be adjusted for issuances of shares of Class A Common Stock at a price below their respective
exercise prices.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Public Warrants may be
exercised upon surrender of the warrant certificate on or prior to the expiration date at the offices of the warrant agent, with the exercise
form on the reverse side of the warrant certificate completed and executed as indicated, accompanied by full payment of the exercise price,
by certified or official bank check payable to us, for the number of Public Warrants being exercised. The warrant holders do not have
the rights or privileges of holders of shares of Class A Common Stock and any voting rights until they exercise their Public Warrants
and receive shares of Class A Common Stock. After the issuance of shares of Class A Common Stock upon exercise of the Public Warrants,
each holder will be entitled to one vote for each share held of record on all matters to be voted on by stockholders.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Warrant holders may elect
to be subject to a restriction on the exercise of their Public Warrants such that an electing warrant holder would not be able to exercise
their Public Warrants to the extent that, after giving effect to such exercise, such holder would beneficially own in excess of 9.8% of
the shares of Class A Common Stock outstanding.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">No fractional shares will
be issued upon exercise of the Public Warrants. If, upon exercise of the Public Warrants, a holder would be entitled to receive a fractional
interest in a share, we will, upon exercise, round up to the nearest whole number the number of shares of Class A Common Stock to be issued
to the warrant holder.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have agreed that, subject
to applicable law, any action, proceeding or claim against us arising out of or relating in any way to the warrant agreement, including
under the Securities Act, will be brought and enforced in the courts of the State of New York or the United States District Court for
the Southern District of New York, and we irrevocably submit to such jurisdiction, which jurisdiction will be the exclusive forum for
any such action, proceeding or claim. This exclusive forum provision shall not apply to suits brought to enforce a duty or liability created
by the Exchange Act, any other claim for which the federal district courts of the United States of America are the sole and exclusive
forum.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>Private Warrants</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">As of December 31, 2024, the following non-Public
Warrants were outstanding:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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  <tr style="vertical-align: bottom">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">3.81</td><td style="text-align: left">&#160;</td></tr>
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    <td style="text-align: center">August 27, 2028</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">3.91</td><td style="text-align: left">&#160;</td></tr>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">3.94</td><td style="text-align: left">&#160;</td></tr>
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    <td style="text-align: center">October 2, 2028</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">4.01</td><td style="text-align: left">&#160;</td></tr>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">4.01</td><td style="text-align: left">&#160;</td></tr>
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    <td style="text-align: center">November 13, 2028</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">4.12</td><td style="text-align: left">&#160;</td></tr>
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    <td style="text-align: center">March 31, 2029</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">4.50</td><td style="text-align: left">&#160;</td></tr>
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    <td style="text-align: center">March 31, 2029</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">4.50</td><td style="text-align: left">&#160;</td></tr>
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    <td style="text-align: center; padding-bottom: 4pt">&#160;</td><td style="padding-bottom: 4pt">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->124<!-- Field: /Sequence --></p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Dividends</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have not paid any cash
dividends on our Class A Common Stock to date. The payment of cash dividends in the future will be dependent upon our revenues and earnings,
if any, capital requirements and general financial condition subsequent to completion of a business combination. The payment of any cash
dividends in the future will be within the discretion of our board of directors at such time. In addition, our board of directors is not
currently contemplating and does not anticipate declaring any stock dividends in the foreseeable future. Further, if we incur any indebtedness,
our ability to declare dividends may be limited by restrictive covenants we may agree to in connection therewith.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Our Transfer Agent and Warrant Agent</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The transfer agent for our
common stock and warrant agent for our warrants is Continental Stock Transfer &amp; Trust Company. We have agreed to indemnify Continental
Stock Transfer &amp; Trust Company in its roles as transfer agent and warrant agent, its agents and each of its stockholders, directors,
officers and employees against all liabilities, including judgments, costs and reasonable counsel fees that may arise out of acts performed
or omitted for its activities in that capacity, except for any liability due to any gross negligence, willful misconduct or bad faith
of the indemnified person or entity.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Listing of our Securities</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our Class A Common Stock and
Public Warrants are listed on the NYSE American under the symbols &#8220;EONR&#8221; and &#8220;EONR WS&#8221;, respectively.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>The Second A&amp;R Charter</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Certain Anti-Takeover Provisions of Delaware
Law and our Second Amended and Restated Certificate of Incorporation and Bylaws&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are subject to the provisions
of Section&#160;203 of the DGCL regulating corporate takeovers. This statute prevents certain Delaware corporations, under certain circumstances,
from engaging in a &#8220;business combination&#8221; with:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
    <td style="width: 0.25IN"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">a stockholder who owns 15% or more of our outstanding voting stock, otherwise known as an &#8220;interested stockholder&#8221;;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
    <td style="width: 0.25IN"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">an affiliate of an interested stockholder; or</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
    <td style="width: 0.25IN"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">an associate of an interested stockholder, for three years following the date that the stockholder became an interested stockholder.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">A &#8220;business combination&#8221;
includes a merger or sale of more than 10% of our assets. However, the above provisions of Section&#160;203 do not apply if:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
    <td style="width: 0.25IN"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">our board of directors approves the transaction that made the stockholder an &#8220;interested stockholder,&#8221; prior to the date of the transaction;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
    <td style="width: 0.25IN"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">after the completion of the transaction that resulted in the stockholder becoming an interested stockholder, that stockholder owned at least 85% of our voting stock outstanding at the time the transaction commenced, other than statutorily excluded shares of common stock; or</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
    <td style="width: 0.25IN"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">on or subsequent to the date of the transaction, the business combination is approved by our board of directors and authorized at a meeting of our stockholders, and not by written consent, by an affirmative vote of at least two-thirds&#160;of the outstanding voting stock not owned by the interested stockholder.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Second A&amp;R Charter
provides that our board of directors will be classified into two classes of directors. As a result, in most circumstances, a person can
gain control of our board only by successfully engaging in a proxy contest at two or more annual meetings.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt"></p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our authorized but unissued
common stock and preferred stock are available for future issuances without stockholder approval and could be utilized for a variety of
corporate purposes, including future offerings to raise additional capital, acquisitions and employee benefit plans. The existence of
authorized but unissued and unreserved common stock and preferred stock could render more difficult or discourage an attempt to obtain
control of us by means of a proxy contest, tender offer, merger or otherwise.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Exclusive Forum for Certain Lawsuits</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Second A&amp;R Charter
requires, to the fullest extent permitted by law, that derivative actions brought in our name, actions against our directors, officers,
other employees or stockholders for breach of fiduciary duty and certain other actions may be brought only in the Court of Chancery in
the State of Delaware and, if brought outside of Delaware, the stockholder bringing the suit will be deemed to have consented to service
of process on such stockholder&#8217;s counsel except any action (A)&#160;as to which the Court of Chancery in the State of Delaware determines
that there is an indispensable party not subject to the jurisdiction of the Court of Chancery (and the indispensable party does not consent
to the personal jurisdiction of the Court of Chancery within ten days following such determination), (B)&#160;which is vested in the exclusive
jurisdiction of a court or forum other than the Court of Chancery or (C)&#160;for which the Court of Chancery does not have subject matter
jurisdiction. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock shall be deemed to have
notice of and consented to the forum provisions in the Second A&amp;R Charter. This choice of forum provision may limit or make more costly
a stockholder&#8217;s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our directors,
officers, other employees or stockholders, which may discourage lawsuits with respect to such claims. Alternatively, if a court were to
find the choice of forum provision contained in the Second A&amp;R Charter to be inapplicable or unenforceable in an action, we may incur
additional costs associated with resolving such action in other jurisdictions, which could harm our business, operating results and financial
condition.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Second A&amp;R Charter
provides that the exclusive forum provision will be applicable to the fullest extent permitted by applicable law, subject to certain exceptions.
Section&#160;27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created
by the Exchange Act or the rules and regulations thereunder. As a result, the exclusive forum provision will not apply to suits brought
to enforce any duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction.
In addition, our the Second A&amp;R Charter provides that, unless we consent in writing to the selection of an alternative forum, the
federal district courts of the United&#160;States of America shall, to the fullest extent permitted by law, be the exclusive forum for
the resolution of any complaint asserting a cause of action arising under the Securities Act of 1933, as amended, or the rules and regulations
promulgated thereunder. We note, however, that there is uncertainty as to whether a court would enforce this provision and that investors
cannot waive compliance with the federal securities laws and the rules and regulations thereunder. Section&#160;22 of the Securities Act
creates concurrent jurisdiction for state and federal courts over all suits brought to enforce any duty or liability created by the Securities
Act or the rules and regulations thereunder.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Special Meeting of Stockholders</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our bylaws provide that special
meetings of our stockholders may be called only by a majority vote of our board of directors, by our Chief Executive Officer or by our
Chairman.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Advance Notice Requirements for Stockholder
Proposals and Director Nominations</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our bylaws provide that stockholders
seeking to bring business before our annual meeting of stockholders, or to nominate candidates for election as directors at our annual
meeting of stockholders must provide timely notice of their intent in writing. To be timely, a stockholder&#8217;s notice will need to
be received by the company secretary at our principal executive offices not later than the close of business on the 90<sup>th</sup>&#160;day
nor earlier than the opening of business on the 120<sup>th</sup>&#160;day prior to the anniversary of the immediately preceding annual
meeting of stockholders. Pursuant to Rule&#160;14a-8&#160;of the Exchange Act, proposals seeking inclusion in our annual proxy statement
must comply with the notice periods contained therein. Our bylaws also specify certain requirements as to the form and content of a stockholders&#8217;
meeting. These provisions may preclude our stockholders from bringing matters before our annual meeting of stockholders or from making
nominations for directors at our annual meeting of stockholders.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt"></p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Action by Written Consent</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Any action required or permitted
to be taken by our common stockholders must be effected by a duly called annual or special meeting of such stockholders and may not be
effected by written consent of the stockholders other than with respect to our common stock.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Classified Board of Directors</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our board of directors is
divided into two classes, Class I and Class II, with members of each class serving staggered one-year&#160;terms. The Second A&amp;R Charter
provide that the authorized number of directors may be changed only by resolution of the board of directors. Subject to the terms of any
preferred stock, any or all of the directors may be removed from office at any time, but only for cause and only by the affirmative vote
of holders of a majority of the voting power of all then outstanding shares of our capital stock entitled to vote generally in the election
of directors, voting together as a single class. Any vacancy on our board of directors, including a vacancy resulting from an enlargement
of our board of directors, may be filled only by vote of a majority of our directors then in office.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Registration Rights</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The holders of the founder
shares, the private placement shares and private placement warrants (and shares issuable upon exercise of such constituent securities)
and warrants that may be issued upon conversion of working capital loans, (and any shares of Class A Common Stock issuable upon exercise
of such warrants), are entitled to registration rights pursuant to one or more registration rights agreements to be signed prior to or
on the closing date of this offering requiring us to register such securities for resale. The holders of these securities will be entitled
to make up to three demands in the case of the founder shares, excluding short form demands, and one demand in the case of the private
placement shares and private placement warrants (and their constituent securities), the working capital loan warrants and, in each case,
the underlying shares, that we register such securities. In addition, the holders have certain &#8220;piggy-back&#8221; registration rights
with respect to registration statements filed subsequent to the completion of our initial business combination and rights to require us
to register for resale such securities pursuant to Rule&#160;415 under the Securities Act.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Company is obligated under
the Common Stock Purchase Agreement and the White Lion RRA to file a registration statement with SEC to register the Class A Common Stock
under the Securities Act&#160;of&#160;1933, as amended, for the resale by White Lion of shares of Class A Common Stock that the Company
may issue to White Lion under the Common Stock Purchase Agreement.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We will bear the expenses
incurred in connection with the filing of any such registration statements.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt"></p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><div><a id="k_019"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following is discussion
of material U.S. federal income tax considerations of the purchase, ownership and disposition of common stock. This discussion applies
only to shares of common stock that are held as a capital asset for U.S. federal income tax purposes. Unless otherwise indicated or the
context otherwise requires, references in this subsection to &#8220;we,&#8221; &#8220;us,&#8221; &#8220;our&#8221; and other similar terms
refer to EON Resources Inc. This discussion is limited to U.S. federal income tax considerations, and does not address estate or gift
tax considerations or considerations arising under the tax laws of any state, local or non-U.S. jurisdiction. This discussion does not
describe all of the U.S. federal income tax consequences that may be relevant to you in light of your particular circumstances, including
the alternative minimum tax, the Medicare tax on certain investment income and the different consequences that may apply if you are subject
to special rules that apply to certain types of investors, such as:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
    <td style="width: 0.25IN"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">financial institutions or financial services entities;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
    <td style="width: 0.25IN"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
    <td style="width: 0.25IN"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
    <td style="width: 0.25IN"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">dealers or traders in securities subject to a mark-to-market&#160;method of accounting with respect to shares of common stock;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
    <td style="width: 0.25IN"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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    <td style="width: 0.5IN">&#160;</td>
    <td style="width: 0.25IN"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
    <td style="width: 0.25IN"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5IN">&#160;</td>
    <td style="width: 0.25IN"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If you are a partnership or
entity or arrangement treated as a partnership for U.S. federal income tax purposes, the U.S. federal income tax treatment of your partners
(or other owners) will generally depend on the status of the partners and your activities. Partnerships and their partners (or other owners)
should consult their tax advisors with respect to the consequences to them of selling their shares of common stock.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">This discussion is based on
the Code and administrative pronouncements, judicial decisions and final, temporary and proposed Treasury regulations as of the date hereof,
changes to any of which subsequent to the date of this prospectus may affect the tax consequences described herein. No assurance can be
given that the IRS would not assert, or that a court would not sustain, a contrary position.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></p><div>

</div><!-- Field: Page; Sequence: 134; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->128<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt"></p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>The discussion below regarding
material U.S. federal income tax considerations of the purchase, ownership and disposition of common stock is intended to provide only
a summary of the material U.S. federal income tax consequences of the acquisition, ownership and disposition of common stock. It does
not address tax consequences that may vary with, or are contingent on, your individual circumstances. In addition, the discussion does
not address any non-income&#160;tax or any non-U.S., state or local tax consequences of ownership. Accordingly, you are strongly urged
to consult with your tax advisor to determine the particular United States federal, state, local or non-U.S. income or other tax consequences
to you</i>.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>U.S. Holders</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">This section applies to you
if you are a &#8220;U.S. holder.&#8221; A U.S. holder is a beneficial owner of shares of common stock who or that is, for U.S. federal
income tax purposes:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; font-size: 10pt">&#160;</td>
    <td style="width: 24px; font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify; font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">an individual who is a citizen or resident of the United States;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) organized in or under the laws of the United States, any state thereof or the District of Columbia;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">an estate the income of which is subject to U.S. federal income taxation purposes regardless of its source; or</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">an entity treated as a trust for U.S. federal income tax purposes if (i) a court within the United States is able to exercise primary supervision over the administration of such trust, and one or more U.S. persons have the authority to control all substantial decisions of such trust or (ii) it has a valid election in effect under Treasury regulations to be treated as a U.S. person.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Taxation of Distributions</i>.
If we pay distributions in cash or other property (other than certain distributions of our stock or rights to acquire our stock) to U.S.
holders of common stock, such distribution generally will constitute a dividend for U.S. federal income tax purposes to the extent paid
from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Distributions in excess
of current and accumulated earnings and profits will constitute a return of capital that will be applied against and reduce (but not below
zero) the U.S. holder&#8217;s adjusted tax basis in its shares of common stock. Any remaining excess will be treated as gain realized
on the sale or other disposition of the shares of common stock and will be treated as described below under the section titled &#8220;<i>Gain
or Loss on Sale, Taxable Exchange or Other Taxable Disposition of Shares of Common Stock</i>.&#8221;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Dividends we pay to a U.S.
holder that is a taxable corporation generally will qualify for the dividends received deduction if the requisite holding period is satisfied.
With certain exceptions (including, but not limited to, dividends treated as investment income for purposes of investment interest deduction
limitations), and provided certain holding period requirements are met, dividends we pay to a non-corporate&#160;U.S. holder generally
will constitute &#8220;qualified dividends&#8221; that will be subject to tax at the maximum tax rate accorded to long-term&#160;capital
gains.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Gain or Loss on Sale, Taxable
Exchange or Other Taxable Disposition of Shares of Common Stock</i>. Upon a sale or other taxable disposition of shares of common stock,
a U.S. holder generally will recognize capital gain or loss in an amount equal to the difference between the amount of cash and the fair
market value of other consideration received and the U.S. holder&#8217;s adjusted tax basis in the shares of common stock sold. A U.S.
holder&#8217;s adjusted tax basis in its shares of common stock generally will equal the U.S. holder&#8217;s acquisition cost less any
prior distributions paid to such U.S. holder with respect to its shares of common stock treated as a return of capital. Any such capital
gain or loss generally will be long-term&#160;capital gain or loss if the U.S. holder&#8217;s holding period for the shares of common
stock so disposed of exceeds one year. Long-term&#160;capital gains recognized by noncorporate U.S. holders will be eligible to be taxed
at reduced rates. The deductibility of capital losses is subject to limitations. U.S. holders who hold different blocks of shares of common
stock (shares of common stock purchased or acquired on different dates or at different prices) should consult their tax advisors to determine
how the above rules apply to them.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Non-U.S. Holders</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">This section applies to you
if you are a &#8220;Non-U.S. holder.&#8221; A Non-U.S. holder is a beneficial owner of shares of common stock who, or that is, for U.S.
federal income tax purposes:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">a non-resident&#160;alien individual, other than certain former citizens and residents of the United States subject to U.S. tax as expatriates;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">a foreign corporation; or</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">an estate or trust that is not a U.S. holder.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><i>&#160;</i></p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></p><div>

</div><!-- Field: Page; Sequence: 135; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->129<!-- Field: /Sequence --></p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Taxation of Distributions</i>.
If we pay distributions in cash or other property (other than certain distributions of our stock or rights to acquire our stock) to Non-U.S.
holders of common stock, to the extent paid out of our current or accumulated earnings and profits (as determined under U.S. federal income
tax principles), such distribution will constitute a dividend for U.S. federal income tax purposes and, provided such dividend is not
effectively connected with the Non-U.S. holder&#8217;s conduct of a trade or business within the United States, we or the applicable withholding
agent will be required to withhold tax from the gross amount of the dividend at a rate of 30 percent (30%), unless such Non-U.S. holder
is eligible for a reduced rate of withholding tax under an applicable income tax treaty and provides proper certification of its eligibility
for such reduced rate (usually on an IRS Form W-8BEN&#160;or W-8BEN-E). Any distribution not constituting a dividend will be treated first
as reducing (but not below zero) the Non-U.S. holder&#8217;s adjusted tax basis in its shares of common stock and, to the extent such
distribution exceeds the Non-U.S. holder&#8217;s adjusted tax basis, as gain realized from the sale or other disposition of the shares
of common stock, which will be treated as described below under the section titled &#8220;<i>Gain on Sale, Taxable Exchange or Other Taxable
Disposition of Shares of Common Stock</i>.&#8221;.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The withholding tax described
in the preceding paragraph does not apply to dividends paid to a Non-U.S. holder who provides an IRS Form W-8ECI&#160;certifying that
the dividends are effectively connected with the Non-U.S. holder&#8217;s conduct of a trade or business within the United States. Instead,
the effectively connected dividends will be subject to regular U.S. federal income tax as if the Non-U.S. holder were a U.S. resident,
subject to an applicable income tax treaty providing otherwise. A Non-U.S. holder that is a corporation for U.S. federal income tax purposes
and is receiving effectively connected dividends may also be subject to an additional &#8220;branch profits tax&#8221; imposed at a rate
of 30 percent (30%) (or a lower applicable income tax treaty rate).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Gain on Sale, Taxable Exchange
or Other Taxable Disposition of Shares of Common Stock</i>. Upon a sale or other taxable disposition of common stock, subject to the discussion
of backup withholding and FATCA below, a Non-U.S. holder generally will not be subject to U.S. federal income or withholding tax in respect
of the sale or disposition, unless:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"/><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the
gain is effectively connected with the conduct of a trade or business by the Non-U.S. holder within the United States (and, under certain
income tax treaties, is attributable to a United States permanent establishment or fixed base maintained by the Non-U.S. holder);</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">we are or have been a &#8220;United States real property holding corporation&#8221; for U.S. federal income tax purposes at any time during the shorter of the five-year&#160;period ending on the date of disposition or the period that the Non-U.S. holder held shares of common stock and, in the circumstance in which shares of common stock are regularly traded on an established securities market, the Non-U.S. holder has owned, directly or constructively, more than five percent (5%) of the issued and outstanding shares of common stock at any time within the shorter of the five-year&#160;period preceding the sale or other disposition or such Non-U.S. holder&#8217;s holding period for the shares of common stock. There can be no assurance that shares of common stock will be treated as regularly traded on an established securities market for this purpose.</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Unless an applicable treaty
provides otherwise, gain described in the first bullet point above will be subject to tax at generally applicable U.S. federal income
tax rates as if the Non-U.S. holder were a U.S. resident. Any gains described in the first bullet point above of a Non-U.S. holder that
is a corporation for U.S. federal income tax purposes may also be subject to an additional &#8220;branch profits tax&#8221; at a 30 percent
(30%) rate (or lower income tax treaty rate). If the second bullet point applies to a Non-U.S. holder, such Non-U.S. holder will be subject
to U.S. tax on such Non-U.S. holder&#8217;s net capital gain for such year (including any gain realized in connection with the redemption)
at a tax rate of 30 percent (30%).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If the third bullet point
above applies to a Non-U.S. holder, gain recognized by such holder in the redemption will be subject to tax at generally applicable U.S.
federal income tax rates. In addition, we or an applicable withholding agent may be required to withhold U.S. federal income tax at a
rate of fifteen percent (15%) of the amount realized upon such sale or other taxable disposition. We believe that we are not, and have
not been at any time since our formation, a United States real property holding corporation and we do not expect to be a United States
real property holding corporation immediately after a business combination is completed.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><!-- Field: Page; Sequence: 136; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->130<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt"></p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Information Reporting and Backup Withholding</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Dividend payments with respect
to shares of common stock and proceeds from the sale, taxable exchange or taxable disposition of shares of common stock may be subject
to information reporting to the IRS and possible United States backup withholding. Backup withholding will not apply, however, to a U.S.
holder who furnishes a correct taxpayer identification number and makes other required certifications, or who is otherwise exempt from
backup withholding and establishes such exempt status.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Amounts treated as dividends
that are paid to a Non-U.S. holder are generally subject to reporting on IRS Form 1042-S&#160;even if the payments are exempt from withholding.
A Non-U.S. holder generally will eliminate any other requirement for information reporting and backup withholding by providing certification
of its foreign status, under penalties of perjury, on a duly executed applicable IRS Form W-8&#160;or by otherwise establishing an exemption.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Backup withholding is not
an additional tax. Amounts withheld as backup withholding may be credited against a holder&#8217;s United States federal income tax liability,
and a holder generally may obtain a refund of any excess amounts withheld under the backup withholding rules by timely filing the appropriate
claim for refund with the IRS and furnishing any required information.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>FATCA Withholding Taxes</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Sections 1471 through 1474
of the Code and the Treasury Regulations and administrative guidance promulgated thereunder (commonly referred to as &#8220;FATCA&#8221;)
impose withholding of 30 percent (30%) on payments of dividends on shares of common stock. In general, no such withholding will be required
with respect to a U.S. holder or an individual Non-U.S. holder that timely provides the certifications required on a valid IRS Form W-9&#160;or
W-8BEN, respectively. Holders potentially subject to withholding include &#8220;foreign financial institutions&#8221; (which is broadly
defined for this purpose and in general includes investment vehicles) and certain other non-U.S. entities unless various U.S. information
reporting and due diligence requirements (generally relating to ownership by U.S. persons of interests in or accounts with those entities)
have been satisfied, or an exemption applies (typically certified as to by the delivery of a properly completed IRS Form W-8BEN-E). If
FATCA withholding is imposed, a beneficial owner that is not a foreign financial institution generally will be entitled to a refund of
any amounts withheld by filing a U.S. federal income tax return (which may entail significant administrative burden). Foreign financial
institutions located in jurisdictions that have an intergovernmental agreement with the United States governing FATCA may be subject to
different rules. Non-U.S. holders should consult their tax advisers regarding the effects of FATCA on dividends paid with respect to shares
of common stock.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><!-- Field: Page; Sequence: 137; Value: 1 --><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><div><a id="k_020"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>SECURITIES ACT RESTRICTIONS ON RESALE OF OUR
SECURITIES</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to Rule 144 under
the Securities Act (&#8220;Rule 144&#8221;), a person who has beneficially owned restricted our Class A Common Stock, Class B Common Stock,
or our Warrants for at least six months would be entitled to sell their securities provided that (i) such person is not deemed to have
been our affiliate at the time of, or at any time during the three months preceding, a sale and (ii) we are subject to the Exchange Act
periodic reporting requirements for at least three months before the sale and have filed all required reports under Section 13 or 15(d)
of the Exchange Act during the 12 months (or such shorter period as the Company was required to file reports) preceding the sale.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Persons who have beneficially
owned restricted Class A Common Stock, Class B Common Stock, or our Warrants for at least six months but who are our affiliates at the
time of, or at any time during the three months preceding, a sale, would be subject to additional restrictions, by which such person would
be entitled to sell within any three-month period only a number of securities that does not exceed the greater of:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">1% of the total number of shares of our Class A Common Stock then outstanding;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The average weekly reported trading volume of our Class A Common Stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Sales by our affiliates under
Rule 144 are also limited by manner of sale provisions and notice requirements and to the availability of current public information about
us.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Restrictions on the Use of Rule 144 by Shell
Companies or Former Shell Companies</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Rule 144 is not available
for the resale of securities initially issued by shell companies (other than business combination related shell companies) or issuers
that have been at any time previously a shell company. However, Rule 144 also includes an important exception to this prohibition if the
following conditions are met:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the issuer of the securities is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act&#894;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the issuer of the securities has filed all Exchange Act reports and material required to be filed, as applicable, during the preceding 12 months (or such shorter period that the issuer was required to file such reports and materials), other than Current Reports on Form 8-K&#894; and</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As a result, the Sponsor will
be able to sell their Founder Shares and Private Placement Warrants, as applicable, pursuant to Rule 144 without registration one year
after the Purchase.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Following the recent completion
of the Purchase, the Company is no longer a shell company, and, once the conditions set forth in the exceptions listed above are satisfied,
Rule 144 will become available for the resale of the above noted restricted securities.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><div><a id="k_021"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>PLAN OF DISTRIBUTION</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are registering the resale by the Selling Securityholders of up
to an aggregate an aggregate of 5,079,050 shares of our Class A Common Stock consisting of (i) up to 5,000,000 ELOC Shares, (ii) 69,050
Exchange Shares, and (iii) 10,000 Service Shares.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Selling Securityholders
and any of their pledgees, donees, assignees and successors-in-interest may, from time to time sell any or all of its shares of Class
A Common Stock being offered under this prospectus on any stock exchange, market or trading facility on which our Class A Common Stock
is traded or in private transactions. These sales may be at fixed or negotiated prices. The Selling Securityholders may use any one or
more of the following methods when disposing of the shares of Class A Common Stock:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%">
  <tr>
    <td style="width: 0.5in; text-align: justify">&#160;</td>
    <td style="vertical-align: top; width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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  <tr>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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  <tr>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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  <tr>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">an exchange distribution in accordance with the rules of the applicable exchange;</span></td></tr>
  <tr>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">privately negotiated transactions;</span></td></tr>
  <tr>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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  <tr>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">broker-dealers may agree with the Selling Securityholders to sell a specified number of such shares at a stipulated price per share;</span></td></tr>
  <tr>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: top; text-align: justify">&#160;</td>
    <td style="vertical-align: top; text-align: justify">&#160;</td></tr>
  <tr>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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  <tr>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: top; text-align: justify">&#160;</td>
    <td style="vertical-align: top; text-align: justify">&#160;</td></tr>
  <tr>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">through one or more underwritten offerings on a firm commitment or best efforts basis;</span></td></tr>
  <tr>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: top; text-align: justify">&#160;</td>
    <td style="vertical-align: top; text-align: justify">&#160;</td></tr>
  <tr>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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  <tr>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: top; text-align: justify">&#160;</td>
    <td style="vertical-align: top; text-align: justify">&#160;</td></tr>
  <tr>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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  <tr>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: top; text-align: justify">&#160;</td>
    <td style="vertical-align: top; text-align: justify">&#160;</td></tr>
  <tr>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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  <tr>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">a combination of any of these methods of sale; and</span></td></tr>
  <tr>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">any other method permitted pursuant to applicable law.</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The shares of Class A Common
Stock may also be sold under Rule 144 under the Securities Act, or any other exemption from registration under the Securities Act, if
available for the Selling Securityholders, rather than under this prospectus. The Selling Securityholders have the sole and absolute discretion
not to accept any purchase offer or make any sale of shares of Class A Common Stock if it deems the purchase price to be unsatisfactory
at any particular time.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Selling Securityholders
may pledge their shares of Class A Common Stock to their brokers under the margin provisions of customer agreements. If the Selling Securityholders
default on a margin loan, the broker may, from time to time, offer and sell the pledged shares.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Broker-dealers engaged by
the Selling Securityholders may arrange for other broker-dealers to participate in sales. Broker-dealers may receive commissions or discounts
from the Selling Securityholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to
be negotiated, which commissions as to a particular broker or dealer may be in excess of customary commissions to the extent permitted
by applicable law.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If sales of shares of Class
A Common Stock offered under this prospectus are made to broker-dealers as principals, we would be required to file a post-effective amendment
to the registration statement of which this prospectus is a part. In the post-effective amendment, we would be required to disclose the
names of any participating broker-dealers and the compensation arrangements relating to such sales.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">White Lion is an underwriter
within the meaning of Section 2(a)(11) of the Securities Act and any broker-dealers or agents that participate in distribution of the
securities will also be underwriters within the meaning of Section 2(a)(11) of the Securities Act, and any profit on sale of the securities
by them and any discounts, commissions or concessions received by them will be underwriting discounts and commissions under the Securities
Act. The other Selling Securityholders and any broker-dealers or agents that are involved in selling the securities may be deemed to be
&#8220;underwriters&#8221; within the meaning of the Securities Act in connection with such sales. In such event, any commissions received
by such broker-dealers or agents and any profit on the resale of the securities purchased by them may be deemed to be underwriting commissions
or discounts under the Securities Act. White Lion has informed us that each such broker-dealer participating in a distribution of securities
by White Lion may receive commissions from White Lion and, if so, such commissions will not exceed customary brokerage commissions. Each
Selling Securityholder has informed us that it does not have any written or oral agreement or understanding, directly or indirectly, with
any person to distribute the securities. The compensation paid to any such particular broker-dealer or agent by any such purchasers of
shares of our Class A Common Stock sold by White Lion or any other Selling Securityholder may be less than or in excess of customary commissions.
None of us, White Lion or the other Selling Securityholders can presently estimate the amount of compensation that any such broker-dealer
or agent will receive from any purchasers of shares of our Class A Common Stock sold by White Lion or the other Selling Securityholders.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">White Lion has informed us
that it intends to use one or more registered broker-dealers (one of which is an affiliate of White Lion) to effectuate all sales, if
any, of our Class A Common Stock that it may acquire from us pursuant to the Common Stock Purchase Agreement. Such sales will be made
at prices and at terms then prevailing or at prices related to the then current market price. Each such registered broker-dealer will
be an underwriter within the meaning of Section 2(a)(11) of the Securities Act. White Lion has informed us that each such broker-dealer
may receive commissions from White Lion and, if so, such commissions will not exceed customary brokerage commissions.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We know of no existing arrangements
between White Lion or any other stockholder, broker, dealer, underwriter or agent relating to the sale or distribution of the shares of
our Class A Common Stock offered by this prospectus.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We also have agreed to indemnify
White Lion and certain other persons against certain liabilities in connection with the offering of shares of our Class A Common Stock
offered hereby, including liabilities arising under the Securities Act or, if such indemnity is unavailable, to contribute amounts required
to be paid in respect of such liabilities. White Lion has agreed to indemnify us against liabilities under the Securities Act that may
arise from certain written information furnished to us by White Lion specifically for use in this prospectus or, if such indemnity is
unavailable, to contribute amounts required to be paid in respect of such liabilities. Insofar as indemnification for liabilities arising
under the Securities Act may be permitted to our directors, officers, and controlling persons, we have been advised that in the opinion
of the SEC this indemnification is against public policy as expressed in the Securities Act and is therefore, unenforceable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">White Lion has represented
to us that at no time prior to the date of the Common Stock Purchase Agreement has White Lion or its agents, representatives or affiliates
engaged in or effected, in any manner whatsoever, directly or indirectly, any short sale (as such term is defined in Rule 200 of Regulation
SHO of the Exchange Act) of our Class A Common Stock or any hedging transaction, which establishes a net short position with respect to
our Class A Common Stock. White Lion has agreed that during the term of the Common Stock Purchase Agreement, neither White Lion, nor any
of its agents, representatives or affiliates will enter into or effect, directly or indirectly, any of the foregoing transactions.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Selling Securityholders
and any other persons participating in the sale or distribution of the shares of Class A Common Stock offered under this prospectus will
be subject to applicable provisions of the Exchange Act, and the rules and regulations under that act, including Regulation M. These provisions
may restrict activities of, and limit the timing of purchases and sales of any of the shares of Class A Common Stock by, the Selling Securityholders
or any other person. With certain exceptions, Regulation M precludes the Selling Securityholders, including White Lion, any affiliated
purchasers, and any broker-dealer or other person who participates in the distribution from bidding for or purchasing, or attempting to
induce any person to bid for or purchase any security which is the subject of the distribution until the entire distribution is complete.
Regulation M also prohibits any bids or purchases made in order to stabilize the price of a security in connection with the distribution
of that security. Furthermore, under Regulation M, persons engaged in a distribution of securities are prohibited from simultaneously
engaging in market making and other activities with respect to those securities for a specified period of time prior to the commencement
of such distributions, subject to specified exceptions or exemptions. All of these limitations may affect the marketability of the shares
of Class A Common Stock offered by this prospectus.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If any of the shares of Class
A Common Stock offered for sale pursuant to this prospectus are transferred other than pursuant to a sale under this prospectus, then
subsequent holders could not use this prospectus until a post-effective amendment or prospectus supplement is filed, naming such holders.
We offer no assurance as to whether the Selling Securityholder will sell all or any portion of the shares offered under this prospectus.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The shares of Class A Common
Stock will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws. In addition,
in certain states, the shares of Class A Common Stock covered hereby may not be sold unless they have been registered or qualified for
sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are required to pay certain
fees and expenses incurred incident to the registration of the securities. We have agreed to indemnify the Selling Securityholders, including
White Lion, against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We agreed to keep this prospectus
effective until the earlier of (i) all of the securities registered hereunder have been sold pursuant to this prospectus or Rule 144 under
the Securities Act or any other rule of similar effect, or (ii) they may be sold pursuant to Rule 144 without volume or manner-of-sale
restrictions, as determined by us. The Resale Securities will be sold only through registered or licensed brokers or dealers if required
under applicable state securities laws. In addition, in certain states, the resale securities covered hereby may not be sold unless they
have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement
is available and is complied with.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt"></p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><div><a id="k_022"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>LEGAL MATTERS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The legality of the issuance
of the shares offered in this prospectus will be passed upon for us by Pryor Cashman LLP, New York, New York. Pryor Cashman LLP beneficially
owns 1,200,000 shares of our Class A Common Stock, subject to the beneficial ownership limitation of 4.99% associated with the warrants
to purchase common stock issued for services rendered.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><div><a id="k_023"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>EXPERTS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The consolidated financial
statements of EON Resources Inc. (f/k/a HNR Acquisition Corp) as of December 31, 2023 (Successor) and 2022 (Predecessor), and for each
of the period from November 15, 2023 to December 31, 2023 (Successor), the period from January&#160;1, 2023 to November 14, 2023 (Predecessor)
and the year ended December&#160;31, 2022 (Predecessor) appearing in this prospectus have been audited by Marcum LLP, an independent registered
public accounting firm, as set forth in their report (which includes an explanatory paragraph relating to EON Resources Inc.&#8217;s ability
to continue as a going concern) appearing elsewhere in this prospectus, and are included in reliance upon such report given on the authority
of such firm as experts in accounting and auditing.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Estimates of the Company&#8217;s
oil and natural gas reserves and related future net cash flows and present values thereof for the years December 31, 2023 and 2022 appearing
in this prospectus were prepared by the third-party independent petroleum engineering firm of William M. Cobb &amp; Associates, Inc.,
summary letters of which are incorporated by reference herein. We have incorporated these estimates in reliance on the authority of such
firm as an expert in such matters.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><div><a id="k_024"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>WHERE YOU CAN FIND MORE INFORMATION</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have filed with the SEC
a registration statement on Form&#160;S-1&#160;under the Securities Act with respect to the securities we are offering by this prospectus.
This prospectus does not contain all of the information included in the registration statement. For further information about us and our
securities, you should refer to the registration statement and the exhibits and schedules filed with the registration statement. Whenever
we make reference in this prospectus to any of our contracts, agreements or other documents, the references are materially complete but
may not include a description of all aspects of such contracts, agreements or other documents, and you should refer to the exhibits attached
to the registration statement for copies of the actual contract, agreement or other document.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Upon the effectiveness of
this registration statement of which this prospectus is a part, we will be subject to the information requirements of the Exchange Act
and will file annual, quarterly and current event reports, proxy statements and other information with the SEC. You can read our SEC filings,
including the registration statement, over the Internet at the SEC&#8217;s website at&#160;<i>www.sec.gov</i>. You may also read and copy
any document we file with the SEC at its public reference facility at 100 F Street, N.E., Washington, D.C. 20549.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">You may also obtain copies
of the documents at prescribed rates by writing to the Public Reference Section of the SEC at 100 F Street, N.E., Washington, D.C. 20549.
Please call the SEC at 1-800-SEC-0330&#160;for further information on the operation of the public reference facilities.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>


</div><!-- Field: Page; Sequence: 142; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->136<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt"></p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><div><a id="k_025"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>INDEX TO CONSOLIDATED FINANCIAL STATEMENTS</b>&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>EON RESOURCES INC. </b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>(F/K/A HNR ACQUISITION CORP)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="background-color: #CCEEFF">
    <td style="vertical-align: top; width: 91%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Audited Consolidated Financial Statements as of December 31, 2023 and 2022:</span></td>
    <td style="white-space: nowrap; vertical-align: bottom; width: 9%; text-align: center">&#160;</td></tr>
  <tr>
    <td style="vertical-align: top; padding-left: 9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#f_001">Report of Independent Registered Public Accounting Firm (PCAOB ID#688)</a></span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-2</span></td></tr>
  <tr style="background-color: #CCEEFF">
    <td style="vertical-align: top; padding-left: 9pt"><a href="#f_002"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Consolidated Balance Sheets as of December 31, 2023 and 2022</span></a></td>
    <td style="white-space: nowrap; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-3</span></td></tr>
  <tr>
    <td style="vertical-align: top; padding-left: 9pt"><a href="#f_003"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Consolidated Statements of Operations for the Years Ended December 31, 2023 and 2022</span></a></td>
    <td style="white-space: nowrap; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-4</span></td></tr>
  <tr style="background-color: #CCEEFF">
    <td style="vertical-align: top; padding-left: 9pt"><a href="#f_004"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Consolidated Statements of Changes in Stockholders&#8217; Equity for the Years Ended December 31, 2023 and 2022</span></a></td>
    <td style="white-space: nowrap; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-5</span></td></tr>
  <tr>
    <td style="vertical-align: top; padding-left: 9pt"><a href="#f_005"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Consolidated Statements of Cash Flows for the Years Ended December 31, 2023 and 2022</span></a></td>
    <td style="white-space: nowrap; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-6</span></td></tr>
  <tr style="background-color: #CCEEFF">
    <td style="vertical-align: top; padding-left: 9pt"><a href="#f_006"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Notes to Consolidated Financial Statements for the Years Ended December 31, 2023 and 2022</span></a></td>
    <td style="white-space: nowrap; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-7</span></td></tr>
  <tr>
    <td style="vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Unaudited Consolidated Financial Statements for the Nine Months ended September 30, 2024 and 2023:</span></td>
    <td style="white-space: nowrap; vertical-align: bottom; text-align: center">&#160;</td></tr>
  <tr style="background-color: #CCEEFF">
    <td style="vertical-align: top; padding-left: 9pt"><a href="#a_003"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023</span></a></td>
    <td style="white-space: nowrap; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-37</span></td></tr>
  <tr>
    <td style="vertical-align: top; padding-left: 9pt"><a href="#a_004"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2024 and 2023</span></a></td>
    <td style="white-space: nowrap; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-38</span></td></tr>
  <tr style="background-color: #CCEEFF">
    <td style="vertical-align: top; padding-left: 9pt"><a href="#a_005"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Consolidated Statements of Changes in Stockholders&#8217; Equity for the Nine Months Ended June 30, 2024 and 2023</span></a></td>
    <td style="white-space: nowrap; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-39</span></td></tr>
  <tr>
    <td style="vertical-align: top; padding-left: 9pt"><a href="#a_006"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2024 and 2023</span></a></td>
    <td style="white-space: nowrap; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-40</span></td></tr>
  <tr style="background-color: #CCEEFF">
    <td style="vertical-align: top; padding-left: 9pt"><a href="#a_007"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Notes to Consolidated Financial Statements for the Nine Months Ended September 30, 2024 and 2023</span></a></td>
    <td style="white-space: nowrap; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-41</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>


</div><!-- Field: Page; Sequence: 143; Options: NewSection; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->1<!-- Field: /Sequence --></span></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt"></p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;<b>&#160;</b></p><div>

</div><p style="margin: 0">&#160;</p><div>





</div><div><a id="f_001"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRMM</b></p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">To the Shareholders and Board of Directors of</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">EON Resources Inc. (f/k/a HNR Acquisition Corp)</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Opinion on the Financial Statements</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We have audited the accompanying consolidated
balance sheets of EON Resources Inc. (f/k/a HNR Acquisition Corp) (the &#8220;Company&#8221;) as of December&#160;31, 2023 (Successor)
and December&#160;31, 2022 (Predecessor), the related consolidated statements of operations, stockholders&#8217; equity (deficit) and
cash flows for each of the period from November 15, 2023 to December 31, 2023 (Successor), the period from January&#160;1, 2023 to November
14, 2023 (Predecessor) and the year ended December&#160;31, 2022 (Predecessor), and the related notes (collectively referred to as the
&#8220;financial statements&#8221;). In our opinion, the financial statements present fairly, in all material respects, the financial
position of the Company as of December&#160;31, 2023 and 2022, and the results of its operations and its cash flows for the period from
November 15, 2023 to December&#160;31, 2023, the period from January&#160;1, 2023 to November&#160;14, 2023 and the year ended December&#160;31,
2022, in conformity with accounting principles generally accepted in the United States of America.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Explanatory Paragraph &#8211; Going Concern</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The accompanying consolidated financial statements
have been prepared assuming that the Company will continue as a going concern. As more fully described in Note&#160;1, the Company has
a significant working capital deficiency and needs to raise additional funds to meet its obligations and sustain its operations. These
conditions raise substantial doubt about the Company&#8217;s ability to continue as a going concern. Management&#8217;s plans in regard to these matters
are also described in Note&#160;1. The consolidated financial statements do not include any adjustments that might result from the outcome
of this uncertainty.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Basis for Opinion</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">These financial statements are the responsibility of the Company&#8217;s
management. Our responsibility is to express an opinion on the Company&#8217;s financial statements based on our audit<b>s</b>. We are a public
accounting firm registered with the Public Company Accounting Oversight Board (United States) (&#8220;PCAOB&#8221;) and are required to
be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations
of the Securities and Exchange Commission and the PCAOB.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We conducted our audits in accordance with the standards of the PCAOB
Those standards require that we plan and perform the audit<b>s</b> to obtain reasonable assurance about whether the financial statements
are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform,
an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal
control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company&#8217;s internal control
over financial reporting. Accordingly, we express no such opinion.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our audits included performing procedures to assess
the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond
to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating
the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">/s/ Marcum <span style="font-variant: small-caps">llp</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-variant: small-caps">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Marcum <span style="font-variant: small-caps">llp</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-variant: small-caps">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We have served as the Company&#8217;s auditor since 2022<b>.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Houston, Texas</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">May 2, 2024</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

</div><!-- Field: Page; Sequence: 144; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->2<!-- Field: /Sequence --></span></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt"></p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>EON RESOURCES INC.</b>&#160;</p><div>

</div><div><a id="f_002"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>F/K/A HNR ACQUISITION CORP</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>CONSOLIDATED BALANCE SHEETS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td>
    <td>&#160;</td>
    <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>December&#160;31,<br/>
2023</b></span></td>
    <td>&#160;</td>
    <td style="border-left: black 1.5pt solid">&#160;</td>
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2022</b></span></td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>ASSETS</b></span></td>
    <td><b>&#160;</b></td>
    <td colspan="2" style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Successor</i></b></span></td>
    <td><b>&#160;</b></td>
    <td style="border-left: black 1.5pt solid"><b>&#160;</b></td>
    <td colspan="2" style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Predecessor</i></b></span></td>
    <td><b>&#160;</b></td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td style="width: 76%; padding-left: 9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Cash</span></td>
    <td style="width: 1%">&#160;</td>
    <td style="width: 1%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</span></td>
    <td style="width: 9%; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents" scale="0" unitRef="usd" id="ixv-31198">3,505,454</ix:nonFraction></span></td>
    <td style="width: 1%">&#160;</td>
    <td style="width: 1%; border-left: black 1.5pt solid">&#160;</td>
    <td style="width: 1%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</span></td>
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    <td style="width: 1%">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Accounts receivable</span></td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-0">&#160;</div></td>
    <td>&#160;</td>
    <td style="border-left: black 1.5pt solid">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-1">&#160;</div></td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td style="padding-left: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Crude oil and natural gas</span></td>
    <td>&#160;</td>
    <td>&#160;</td>
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    <td>&#160;</td>
    <td style="border-left: black 1.5pt solid">&#160;</td>
    <td>&#160;</td>
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    <td>&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Other</span></td>
    <td>&#160;</td>
    <td>&#160;</td>
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    <td>&#160;</td>
    <td style="border-left: black 1.5pt solid">&#160;</td>
    <td>&#160;</td>
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    <td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td style="padding-left: 9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Short-term derivative instrument asset</span></td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DerivativeAssetsCurrent" scale="0" unitRef="usd" id="ixv-31204">391,488</ix:nonFraction></span></td>
    <td>&#160;</td>
    <td style="border-left: black 1.5pt solid">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: right"><span style="-sec-ix-hidden: hidden-fact-2; font-family: Times New Roman, Times, Serif; font-size: 10pt">-</span></td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Prepaid expenses and other current assets</span></td>
    <td>&#160;</td>
    <td style="border-bottom: black 1.5pt solid">&#160;</td>
    <td style="border-bottom: black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PrepaidExpenseAndOtherAssetsCurrent" scale="0" unitRef="usd" id="ixv-31205">722,002</ix:nonFraction></span></td>
    <td>&#160;</td>
    <td style="border-left: black 1.5pt solid">&#160;</td>
    <td style="border-bottom: black 1.5pt solid">&#160;</td>
    <td style="border-bottom: black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PrepaidExpenseAndOtherAssetsCurrent" scale="0" unitRef="usd" id="ixv-31206">395,204</ix:nonFraction></span></td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Total current assets</b></span></td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AssetsCurrent" scale="0" unitRef="usd" id="ixv-31207">6,812,448</ix:nonFraction></span></td>
    <td>&#160;</td>
    <td style="border-left: black 1.5pt solid">&#160;</td>
    <td>&#160;</td>
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    <td>&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Crude oil and natural gas properties, successful efforts method:</span></td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: right">&#160;</td>
    <td>&#160;</td>
    <td style="border-left: black 1.5pt solid">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: right">&#160;</td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td style="padding-left: 9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Proved properties</span></td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProvedOilAndGasPropertySuccessfulEffortMethod" scale="0" unitRef="usd" id="ixv-31209">94,189,372</ix:nonFraction></span></td>
    <td>&#160;</td>
    <td style="border-left: black 1.5pt solid">&#160;</td>
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    <td>&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Accumulated depreciation, depletion, amortization and impairment</span></td>
    <td>&#160;</td>
    <td style="border-bottom: black 1.5pt solid">&#160;</td>
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    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">)</span></td>
    <td style="border-left: black 1.5pt solid">&#160;</td>
    <td style="border-bottom: black 1.5pt solid">&#160;</td>
    <td style="border-bottom: black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(<ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OilAndGasPropertySuccessfulEffortMethodAccumulatedDepreciationDepletionAmortizationAndImpairment" scale="0" unitRef="usd" id="ixv-31212">9,592,296</ix:nonFraction></span></td>
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">)</span></td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td style="padding-left: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Total oil and natural gas properties, net</span></td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OilAndGasPropertySuccessfulEffortMethodNet" scale="0" unitRef="usd" id="ixv-31213">93,837,245</ix:nonFraction></span></td>
    <td>&#160;</td>
    <td style="border-left: black 1.5pt solid">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OilAndGasPropertySuccessfulEffortMethodNet" scale="0" unitRef="usd" id="ixv-31214">55,206,917</ix:nonFraction></span></td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td>&#160;</td>
    <td>&#160;</td>
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    <td>&#160;</td>
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    <td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
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    <td>&#160;</td>
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    <td>&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td>&#160;</td>
    <td>&#160;</td>
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    <td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
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    <td>&#160;</td>
    <td>&#160;</td>
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    <td>&#160;</td>
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    <td>&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td>&#160;</td>
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    <td>&#160;</td>
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    <td style="border-bottom: black 1.5pt solid; text-align: right"><span style="-sec-ix-hidden: hidden-fact-7; font-family: Times New Roman, Times, Serif; font-size: 10pt">-</span></td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
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    <td>&#160;</td>
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    <td>&#160;</td>
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    <td>&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 9pt">&#160;</td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: right">&#160;</td>
    <td>&#160;</td>
    <td style="border-left: black 1.5pt solid">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: right">&#160;</td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
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    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: right">&#160;</td>
    <td>&#160;</td>
    <td style="border-left: black 1.5pt solid">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: right">&#160;</td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Current liabilities</span></td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: right">&#160;</td>
    <td>&#160;</td>
    <td style="border-left: black 1.5pt solid">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: right">&#160;</td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
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    <td>&#160;</td>
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</span></td>
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    <td>&#160;</td>
    <td style="border-left: black 1.5pt solid">&#160;</td>
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</span></td>
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    <td>&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Accrued liabilities and other</span></td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AccruedLiabilitiesCurrentAndNoncurrent" scale="0" unitRef="usd" id="ixv-31224">4,422,183</ix:nonFraction></span></td>
    <td>&#160;</td>
    <td style="border-left: black 1.5pt solid">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AccruedLiabilitiesCurrentAndNoncurrent" scale="0" unitRef="usd" id="ixv-31225">1,128,671</ix:nonFraction></span></td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td style="padding-left: 9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Revenue and royalties payable</span></td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AccruedRoyaltiesCurrent" scale="0" unitRef="usd" id="ixv-31226">461,773</ix:nonFraction></span></td>
    <td>&#160;</td>
    <td style="border-left: black 1.5pt solid">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AccruedRoyaltiesCurrent" scale="0" unitRef="usd" id="ixv-31227">617,163</ix:nonFraction></span></td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Revenue and royalties payable &#8211; related parties</span></td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AccruedRoyaltiesCurrentAndNoncurrent" scale="0" unitRef="usd" id="ixv-31228">1,523,138</ix:nonFraction></span></td>
    <td>&#160;</td>
    <td style="border-left: black 1.5pt solid">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: right"><span style="-sec-ix-hidden: hidden-fact-8; font-family: Times New Roman, Times, Serif; font-size: 10pt">-</span></td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td style="padding-left: 9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Deferred underwriting fee payable</span></td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DeferredCompensationLiabilityCurrent" scale="0" unitRef="usd" id="ixv-31229">1,300,000</ix:nonFraction></span></td>
    <td>&#160;</td>
    <td style="border-left: black 1.5pt solid">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: right"><span style="-sec-ix-hidden: hidden-fact-9; font-family: Times New Roman, Times, Serif; font-size: 10pt">-</span></td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Short-term derivative instrument liabilities</span></td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: right"><span style="-sec-ix-hidden: hidden-fact-10; font-family: Times New Roman, Times, Serif; font-size: 10pt">-</span></td>
    <td>&#160;</td>
    <td style="border-left: black 1.5pt solid">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DerivativeLiabilitiesCurrent" scale="0" unitRef="usd" id="ixv-31230">1,191,354</ix:nonFraction></span></td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td style="padding-left: 9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Related party notes payable, net of discount</span></td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction contextRef="c3" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NotesPayableCurrent" scale="0" unitRef="usd" id="ixv-31231">2,359,048</ix:nonFraction></span></td>
    <td>&#160;</td>
    <td style="border-left: black 1.5pt solid">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: right"><span style="-sec-ix-hidden: hidden-fact-11; font-family: Times New Roman, Times, Serif; font-size: 10pt">-</span></td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Current portion of operating lease liabilities</span></td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: right"><span style="-sec-ix-hidden: hidden-fact-12; font-family: Times New Roman, Times, Serif; font-size: 10pt">-</span></td>
    <td>&#160;</td>
    <td style="border-left: black 1.5pt solid">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OperatingLeaseLiabilityCurrent" scale="0" unitRef="usd" id="ixv-31232">70,232</ix:nonFraction></span></td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td style="padding-left: 9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Current portion of long-term debt</span></td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OtherLongTermDebtCurrent" scale="0" unitRef="usd" id="ixv-31233">4,157,602</ix:nonFraction></span></td>
    <td>&#160;</td>
    <td style="border-left: black 1.5pt solid">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: right"><span style="-sec-ix-hidden: hidden-fact-13; font-family: Times New Roman, Times, Serif; font-size: 10pt">-</span></td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Forward purchase agreement liability</span></td>
    <td>&#160;</td>
    <td style="border-bottom: black 1.5pt solid">&#160;</td>
    <td style="border-bottom: black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="hnra:ForwardPurchaseAgreementLiability" scale="0" unitRef="usd" id="ixv-31234">1,094,097</ix:nonFraction></span></td>
    <td>&#160;</td>
    <td style="border-left: black 1.5pt solid">&#160;</td>
    <td style="border-bottom: black 1.5pt solid">&#160;</td>
    <td style="border-bottom: black 1.5pt solid; text-align: right"><span style="-sec-ix-hidden: hidden-fact-14; font-family: Times New Roman, Times, Serif; font-size: 10pt">-</span></td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td style="padding-left: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Total current liabilities</span></td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:LiabilitiesCurrent" scale="0" unitRef="usd" id="ixv-31235">20,113,049</ix:nonFraction></span></td>
    <td>&#160;</td>
    <td style="border-left: black 1.5pt solid">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:LiabilitiesCurrent" scale="0" unitRef="usd" id="ixv-31236">4,225,474</ix:nonFraction></span></td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Long-term debt, net of current portion and discount</span></td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="hnra:LongtermDebtNetOfCurrentPortionAndDiscount" scale="0" unitRef="usd" id="ixv-31237">37,486,206</ix:nonFraction></span></td>
    <td>&#160;</td>
    <td style="border-left: black 1.5pt solid">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="hnra:LongtermDebtNetOfCurrentPortionAndDiscount" scale="0" unitRef="usd" id="ixv-31238">26,750,000</ix:nonFraction></span></td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td style="padding-left: 9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Warrant liability</span></td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DerivativeLiabilities" scale="0" unitRef="usd" id="ixv-31239">4,777,971</ix:nonFraction></span></td>
    <td>&#160;</td>
    <td style="border-left: black 1.5pt solid">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: right"><span style="-sec-ix-hidden: hidden-fact-15; font-family: Times New Roman, Times, Serif; font-size: 10pt">-</span></td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Deferred tax liability</span></td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DeferredIncomeTaxLiabilitiesNet" scale="0" unitRef="usd" id="ixv-31240">6,163,140</ix:nonFraction></span></td>
    <td>&#160;</td>
    <td style="border-left: black 1.5pt solid">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: right"><span style="-sec-ix-hidden: hidden-fact-16; font-family: Times New Roman, Times, Serif; font-size: 10pt">-</span></td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td style="padding-left: 9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Operating lease liabilities</span></td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: right"><span style="-sec-ix-hidden: hidden-fact-17; font-family: Times New Roman, Times, Serif; font-size: 10pt">-</span></td>
    <td>&#160;</td>
    <td style="border-left: black 1.5pt solid">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OperatingLeaseLiabilityNoncurrent" scale="0" unitRef="usd" id="ixv-31241">58,921</ix:nonFraction></span></td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Asset retirement obligations</span></td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AssetRetirementObligationsNoncurrent" scale="0" unitRef="usd" id="ixv-31242">904,297</ix:nonFraction></span></td>
    <td>&#160;</td>
    <td style="border-left: black 1.5pt solid">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AssetRetirementObligationsNoncurrent" scale="0" unitRef="usd" id="ixv-31243">4,494,761</ix:nonFraction></span></td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td style="padding-left: 9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Other liabilities</span></td>
    <td>&#160;</td>
    <td style="border-bottom: black 1.5pt solid">&#160;</td>
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    <td>&#160;</td>
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    <td>&#160;</td>
    <td>&#160;</td>
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    <td>&#160;</td>
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    <td>&#160;</td>
    <td style="border-left: black 1.5pt solid">&#160;</td>
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    <td>&#160;</td>
    <td>&#160;</td>
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    <td>&#160;</td>
    <td style="border-left: black 1.5pt solid">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: right">&#160;</td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
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    <td>&#160;</td>
    <td>&#160;</td>
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    <td>&#160;</td>
    <td style="border-left: black 1.5pt solid">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: right"><span style="-sec-ix-hidden: hidden-fact-23; font-family: Times New Roman, Times, Serif; font-size: 10pt">-</span></td>
    <td>&#160;</td></tr>
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    <td>&#160;</td>
    <td>&#160;</td>
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    <td>&#160;</td>
    <td style="border-left: black 1.5pt solid">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="hnra:OwnersEquity" scale="0" unitRef="usd" id="ixv-31277">28,504,247</ix:nonFraction></span></td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
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    <td>&#160;</td>
    <td style="border-bottom: black 1.5pt solid">&#160;</td>
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    <td style="border-left: black 1.5pt solid">&#160;</td>
    <td style="border-bottom: black 1.5pt solid">&#160;</td>
    <td style="border-bottom: black 1.5pt solid; text-align: right"><span style="-sec-ix-hidden: hidden-fact-25; font-family: Times New Roman, Times, Serif; font-size: 10pt">-</span></td>
    <td>&#160;</td></tr>
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    <td>&#160;</td>
    <td>&#160;</td>
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    <td>&#160;</td>
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    <td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
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    <td>&#160;</td>
    <td style="border-bottom: black 1.5pt solid">&#160;</td>
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    <td>&#160;</td>
    <td style="border-left: black 1.5pt solid">&#160;</td>
    <td style="border-bottom: black 1.5pt solid">&#160;</td>
    <td style="border-bottom: black 1.5pt solid; text-align: right"><span style="-sec-ix-hidden: hidden-fact-26; font-family: Times New Roman, Times, Serif; font-size: 10pt">-</span></td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td>&#160;</td>
    <td style="border-bottom: black 1.5pt solid">&#160;</td>
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    <td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
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    <td>&#160;</td>
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    <td>&#160;</td>
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    <td>&#160;</td></tr>
  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">The accompanying notes are an integral part of
these consolidated financial statements.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>


</div><!-- Field: Page; Sequence: 145; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->3<!-- Field: /Sequence --></span></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt"></p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>EON RESOURCES INC.</b>&#160;</p><div>

</div><div><a id="f_003"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>F/K/A HNR ACQUISITION CORP</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>CONSOLIDATED STATEMENTS OF OPERATIONS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">General and administrative</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-bottom: 1.5pt">Acquisition costs</td><td style="padding-bottom: 1.5pt">&#160;</td>
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-35">-</div></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: left; padding-bottom: 1.5pt">Total expenses</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: left">Other Income (expenses)</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">Net loss on asset sales and impairment</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-37">-</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Change in fair value of warrant liability</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-39">-</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-48">-</div></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: left">Net income (loss)</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-bottom: 1.5pt">Net income (loss) attributable to noncontrolling interests</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-49">-</div></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid; padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-50">-</div></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-51">-</div></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 4pt">Net income (loss) attributable to EON Resources Inc.</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">(<ix:nonFraction contextRef="c21" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NetIncomeLoss" scale="0" sign="-" unitRef="usd" id="ixv-31346">9,001,202</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">)</td><td style="border-left: Black 1.5pt solid; padding-bottom: 4pt">&#160;</td>
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    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c23" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NetIncomeLoss" scale="0" unitRef="usd" id="ixv-31348">18,296,002</ix:nonFraction></td><td style="padding-bottom: 4pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="border-bottom: Black 4pt double; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c21" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding" scale="0" unitRef="shares" id="ixv-31349"><ix:nonFraction contextRef="c21" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:WeightedAverageNumberOfSharesIssuedBasic" scale="0" unitRef="shares" id="ixv-31350">5,235,131</ix:nonFraction></ix:nonFraction></td><td style="padding-bottom: 4pt; text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid; padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; text-align: right"><div style="-sec-ix-hidden: hidden-fact-52"><div style="-sec-ix-hidden: hidden-fact-53">-</div></div></td><td style="padding-bottom: 4pt; text-align: left">&#160;</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; text-align: right"><div style="-sec-ix-hidden: hidden-fact-54"><div style="-sec-ix-hidden: hidden-fact-55">-</div></div></td><td style="padding-bottom: 4pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-bottom: 4pt">Net income (loss) per share of common stock &#8211; basic and diluted</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">(<ix:nonFraction contextRef="c21" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:EarningsPerShareDiluted" scale="0" sign="-" unitRef="usdPershares" id="ixv-31351"><ix:nonFraction contextRef="c21" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:EarningsPerShareBasic" scale="0" sign="-" unitRef="usdPershares" id="ixv-31352">1.72</ix:nonFraction></ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">)</td><td style="border-left: Black 1.5pt solid; padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right"><div style="-sec-ix-hidden: hidden-fact-56"><div style="-sec-ix-hidden: hidden-fact-57">-</div></div></td><td style="padding-bottom: 4pt; text-align: left">&#160;</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right"><div style="-sec-ix-hidden: hidden-fact-58"><div style="-sec-ix-hidden: hidden-fact-59">-</div></div></td><td style="padding-bottom: 4pt; text-align: left">&#160;</td></tr>
  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">The accompanying notes are an integral part of
these consolidated financial statements.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>


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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>EON RESOURCES INC.</b>&#160;</p><div>

</div><div><a id="f_004"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>F/K/A HNR ACQUISITION CORP</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS&#8217; EQUITY (DEFICIT)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold; font-style: italic">Predecessor</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; text-align: center; font-weight: bold">Owner&#8217;s Equity</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td>&#160;</td>
    <td colspan="2">&#160;</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 88%">Balance at December 31, 2021</td><td style="width: 1%">&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">Net income</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Equity-based compensation</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c36" decimals="0" format="ixt:num-dot-decimal" name="hnra:StockIssuedDuringPeriodValueEquitybasedCompensation" scale="0" unitRef="usd" id="ixv-31355">6,394</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td>Distributions</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction contextRef="c36" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DistributionMadeToLimitedPartnerCashDistributionsDeclared" scale="0" sign="-" unitRef="usd" id="ixv-31356">2,000,000</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>Balance at December 31, 2022</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">Net income</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>Balance at November 14, 2023</td><td style="padding-bottom: 4pt">&#160;</td>
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  </table><div>


</div><p style="margin: 0">&#160;</p><div>

</div><p style="margin: 0"></p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></td>
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  <tr style="vertical-align: bottom">
    <td style="text-align: center"><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></td>
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    <td colspan="2" style="text-align: center"><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></td>
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  <tr style="vertical-align: bottom">
    <td style="text-align: center"><span style="font-size: 8pt">&#160;</span></td><td style="font-weight: bold"><span style="font-size: 8pt">&#160;</span></td>
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    <td colspan="2" style="font-weight: bold; text-align: center"><span style="font-size: 8pt">Additional</span></td><td style="font-weight: bold"><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td colspan="2" style="text-align: center"><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></td><td style="font-weight: bold"><span style="font-size: 8pt">&#160;</span></td>
    <td colspan="2" style="font-weight: bold; text-align: center"><span style="font-size: 8pt">(Deficit)&#160;Equity<br/> Attributable&#160;to
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    <td colspan="2" style="text-align: center"><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></td><td style="font-weight: bold"><span style="font-size: 8pt">&#160;</span></td>
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  <tr style="vertical-align: bottom">
    <td style="text-align: center"><span style="font-size: 8pt">&#160;</span></td><td style="font-weight: bold; padding-bottom: 1.5pt"><span style="font-size: 8pt">&#160;</span></td>
    <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid"><span style="font-size: 8pt">Common
    Stock</span></td><td style="padding-bottom: 1.5pt; font-weight: bold"><span style="font-size: 8pt">&#160;</span></td><td style="font-weight: bold; padding-bottom: 1.5pt"><span style="font-size: 8pt">&#160;</span></td>
    <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid"><span style="font-size: 8pt">Common
    Stock</span></td><td style="padding-bottom: 1.5pt; font-weight: bold"><span style="font-size: 8pt">&#160;</span></td><td style="font-weight: bold; padding-bottom: 1.5pt"><span style="font-size: 8pt">&#160;</span></td>
    <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid"><span style="font-size: 8pt">Common
    Stock</span></td><td style="padding-bottom: 1.5pt; font-weight: bold"><span style="font-size: 8pt">&#160;</span></td><td style="font-weight: bold; padding-bottom: 1.5pt"><span style="font-size: 8pt">&#160;</span></td>
    <td colspan="2" style="font-weight: bold; text-align: center"><span style="font-size: 8pt">Paid-In</span></td><td style="padding-bottom: 1.5pt; font-weight: bold"><span style="font-size: 8pt">&#160;</span></td><td style="font-weight: bold; padding-bottom: 1.5pt"><span style="font-size: 8pt">&#160;</span></td>
    <td colspan="2" style="font-weight: bold; text-align: center"><span style="font-size: 8pt">Accumulated</span></td><td style="padding-bottom: 1.5pt; font-weight: bold"><span style="font-size: 8pt">&#160;</span></td><td style="font-weight: bold; padding-bottom: 1.5pt"><span style="font-size: 8pt">&#160;</span></td>
    <td colspan="2" style="font-weight: bold; text-align: center"><span style="font-size: 8pt">Resources</span></td><td style="padding-bottom: 1.5pt; font-weight: bold"><span style="font-size: 8pt">&#160;</span></td><td style="font-weight: bold; padding-bottom: 1.5pt"><span style="font-size: 8pt">&#160;</span></td>
    <td colspan="2" style="font-weight: bold; text-align: center"><span style="font-size: 8pt">Noncontrolling</span></td><td style="padding-bottom: 1.5pt; font-weight: bold"><span style="font-size: 8pt">&#160;</span></td><td style="font-weight: bold; padding-bottom: 1.5pt"><span style="font-size: 8pt">&#160;</span></td>
    <td colspan="2" style="font-weight: bold; text-align: center"><span style="font-size: 8pt">(Deficit)</span></td><td style="padding-bottom: 1.5pt; font-weight: bold"><span style="font-size: 8pt">&#160;</span></td></tr>
  <tr style="vertical-align: bottom">
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    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid"><span style="font-size: 8pt">Shares</span></td><td style="padding-bottom: 1.5pt; font-weight: bold"><span style="font-size: 8pt">&#160;</span></td><td style="font-weight: bold; padding-bottom: 1.5pt"><span style="font-size: 8pt">&#160;</span></td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid"><span style="font-size: 8pt">Amount</span></td><td style="padding-bottom: 1.5pt; font-weight: bold"><span style="font-size: 8pt">&#160;</span></td><td style="font-weight: bold; padding-bottom: 1.5pt"><span style="font-size: 8pt">&#160;</span></td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid"><span style="font-size: 8pt">Shares</span></td><td style="padding-bottom: 1.5pt; font-weight: bold"><span style="font-size: 8pt">&#160;</span></td><td style="font-weight: bold; padding-bottom: 1.5pt"><span style="font-size: 8pt">&#160;</span></td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid"><span style="font-size: 8pt">Amount</span></td><td style="padding-bottom: 1.5pt; font-weight: bold"><span style="font-size: 8pt">&#160;</span></td><td style="font-weight: bold; padding-bottom: 1.5pt"><span style="font-size: 8pt">&#160;</span></td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid"><span style="font-size: 8pt">Shares</span></td><td style="padding-bottom: 1.5pt; font-weight: bold"><span style="font-size: 8pt">&#160;</span></td><td style="font-weight: bold; padding-bottom: 1.5pt"><span style="font-size: 8pt">&#160;</span></td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid"><span style="font-size: 8pt">Amount</span></td><td style="padding-bottom: 1.5pt; font-weight: bold"><span style="font-size: 8pt">&#160;</span></td><td style="font-weight: bold; padding-bottom: 1.5pt"><span style="font-size: 8pt">&#160;</span></td>
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    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid"><span style="font-size: 8pt">Deficit</span></td><td style="padding-bottom: 1.5pt; font-weight: bold"><span style="font-size: 8pt">&#160;</span></td><td style="font-weight: bold; padding-bottom: 1.5pt"><span style="font-size: 8pt">&#160;</span></td>
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    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid"><span style="font-size: 8pt">Equity</span></td><td style="padding-bottom: 1.5pt; font-weight: bold"><span style="font-size: 8pt">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 28.5%; font-weight: bold; text-indent: -9pt; padding-left: 9pt"><span style="font-size: 8pt">Balance &#8211; November&#160;15,&#160;2023</span></td><td style="width: 0.5%"><span style="font-size: 8pt">&#160;</span></td>
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    <td style="width: 0.5%; text-align: left"><span style="font-size: 8pt">$</span></td><td style="width: 5%; text-align: right"><span style="font-size: 8pt"><ix:nonFraction contextRef="c40" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:StockholdersEquityIncludingPortionAttributableToNoncontrollingInterest" scale="0" unitRef="usd" id="ixv-31361">346</ix:nonFraction></span></td><td style="width: 0.5%; text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="width: 0.5%"><span style="font-size: 8pt">&#160;</span></td>
    <td style="width: 0.5%; text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="width: 5%; text-align: right"><span style="-sec-ix-hidden: hidden-fact-84; font-size: 8pt">-</span></td><td style="width: 0.5%; text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="width: 0.5%"><span style="font-size: 8pt">&#160;</span></td>
    <td style="width: 0.5%; text-align: left"><span style="font-size: 8pt">$</span></td><td style="width: 5%; text-align: right"><span style="-sec-ix-hidden: hidden-fact-85; font-size: 8pt">-</span></td><td style="width: 0.5%; text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="width: 0.5%"><span style="font-size: 8pt">&#160;</span></td>
    <td style="width: 0.5%; text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="width: 5%; text-align: right"><span style="-sec-ix-hidden: hidden-fact-86; font-size: 8pt">-</span></td><td style="width: 0.5%; text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="width: 0.5%"><span style="font-size: 8pt">&#160;</span></td>
    <td style="width: 0.5%; text-align: left"><span style="font-size: 8pt">$</span></td><td style="width: 5%; text-align: right"><span style="-sec-ix-hidden: hidden-fact-87; font-size: 8pt">-</span></td><td style="width: 0.5%; text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="width: 0.5%"><span style="font-size: 8pt">&#160;</span></td>
    <td style="width: 0.5%; text-align: left"><span style="font-size: 8pt">$</span></td><td style="width: 5%; text-align: right"><span style="font-size: 8pt">(<ix:nonFraction contextRef="c43" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:StockholdersEquityIncludingPortionAttributableToNoncontrollingInterest" scale="0" sign="-" unitRef="usd" id="ixv-31362">9,719,485</ix:nonFraction></span></td><td style="width: 0.5%; text-align: left"><span style="font-size: 8pt">)</span></td><td style="width: 0.5%"><span style="font-size: 8pt">&#160;</span></td>
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  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">(<ix:nonFraction contextRef="c48" decimals="INF" format="ixt:num-dot-decimal" name="us-gaap:StockIssuedDuringPeriodSharesOther" scale="0" sign="-" unitRef="shares" id="ixv-31366">3,457,813</ix:nonFraction></span></td><td style="text-align: left"><span style="font-size: 8pt">)</span></td><td><span style="font-size: 8pt">&#160;</span></td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; text-indent: -9pt; padding-left: 9pt"><span style="font-size: 8pt">Shares not redeemer under Forward
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -9pt; padding-left: 9pt"><span style="font-size: 8pt">Forward purchase agreement prepayment</span></td><td><span style="font-size: 8pt">&#160;</span></td>
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    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="-sec-ix-hidden: hidden-fact-113; font-size: 8pt">-</span></td><td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; padding-bottom: 4pt; text-indent: -9pt; padding-left: 9pt"><span style="font-size: 8pt">Balance&#160;&#8211;&#160;December&#160;31,
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  </table><div>
</div><p style="margin: 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">The accompanying notes are an integral part of
these consolidated financial statements.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><!-- Field: Page; Sequence: 147; Value: 1 --><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>EON RESOURCES INC.</b>&#160;</p><div>

</div><div><a id="f_005"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>F/K/A HNR ACQUISITION CORP</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>CONSOLIDATED STATEMENTS OF CASH FLOWS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td style="font-weight: bold">Operating activities:</td><td>&#160;</td>
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    <td colspan="2">&#160;</td><td>&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-168">-</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-170">-</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-indent: -9pt; padding-left: 27pt">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -9pt; padding-left: 0.5in">Prepaid expenses and other assets</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c21" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInPrepaidDeferredExpenseAndOtherAssets" scale="0" unitRef="usd" id="ixv-31443">258,431</ix:nonFraction></td><td style="text-align: left">)</td><td style="border-left: Black 1.5pt solid">&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; text-indent: -9pt; padding-left: 0.5in">Related party note receivable interest income</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-172">-</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -9pt; padding-left: 0.5in">Accounts payable and accrued liabilities</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c21" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInOtherAccountsPayableAndAccruedLiabilities" scale="0" unitRef="usd" id="ixv-31447">7,953,598</ix:nonFraction></td><td style="text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid">&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c23" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInOtherAccountsPayableAndAccruedLiabilities" scale="0" unitRef="usd" id="ixv-31449">148,143</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; text-indent: -9pt; padding-left: 0.5in">Accrued liabilities</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c21" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInAccruedSalaries" scale="0" unitRef="usd" id="ixv-31450">1,251,677</ix:nonFraction></td><td style="text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -9pt; padding-left: 0.5in">Royalties payable</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c21" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInRoyaltiesPayable" scale="0" sign="-" unitRef="usd" id="ixv-31453">313,381</ix:nonFraction></td><td style="text-align: left">)</td><td style="border-left: Black 1.5pt solid">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c109" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInRoyaltiesPayable" scale="0" unitRef="usd" id="ixv-31454">157,991</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c23" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInRoyaltiesPayable" scale="0" unitRef="usd" id="ixv-31455">10,248</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -9pt; padding-left: 0.5in">Royalties payable &#8211; related party</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c21" decimals="0" format="ixt:num-dot-decimal" name="hnra:IncreaseDecreaseInRoyaltiesPayableRelatedParty" scale="0" unitRef="usd" id="ixv-31456">323,717</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid; padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c109" decimals="0" format="ixt:num-dot-decimal" name="hnra:IncreaseDecreaseInRoyaltiesPayableRelatedParty" scale="0" unitRef="usd" id="ixv-31457">8,066</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction contextRef="c23" decimals="0" format="ixt:num-dot-decimal" name="hnra:IncreaseDecreaseInRoyaltiesPayableRelatedParty" scale="0" sign="-" unitRef="usd" id="ixv-31458">2,147,652</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -9pt; padding-left: 45pt">Net cash provided by operating activities</td><td style="padding-bottom: 1.5pt">&#160;</td>
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c109" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NetCashProvidedByUsedInOperatingActivities" scale="0" unitRef="usd" id="ixv-31460">8,190,563</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c23" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NetCashProvidedByUsedInOperatingActivities" scale="0" unitRef="usd" id="ixv-31461">18,651,132</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="font-weight: bold; text-align: left; text-indent: -9pt; padding-left: 9pt">Investing activities:</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -9pt; padding-left: 0.25in">Development of crude oil and gas properties</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c21" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PaymentsToAcquireOilAndGasPropertyAndEquipment" scale="0" unitRef="usd" id="ixv-31462">238,499</ix:nonFraction></td><td style="text-align: left">)</td><td style="border-left: Black 1.5pt solid">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c109" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PaymentsToAcquireOilAndGasPropertyAndEquipment" scale="0" unitRef="usd" id="ixv-31463">6,769,557</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c23" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PaymentsToAcquireOilAndGasPropertyAndEquipment" scale="0" unitRef="usd" id="ixv-31464">16,891,856</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; text-indent: -9pt; padding-left: 0.25in">Acquisition of business, net of cash acquired</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c21" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PaymentsToAcquireBusinessesNetOfCashAcquired" scale="0" unitRef="usd" id="ixv-31465">30,827,804</ix:nonFraction></td><td style="text-align: left">)</td><td style="border-left: Black 1.5pt solid">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-173">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-174">-</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -9pt; padding-left: 0.25in">Trust Account withdrawals</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c21" decimals="0" format="ixt:num-dot-decimal" name="hnra:TrustAccountWithdrawals" scale="0" unitRef="usd" id="ixv-31466">49,362,479</ix:nonFraction></td><td style="text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-175">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-176">-</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -9pt; padding-left: 0.25in">Issuance of related party note receivable</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-177">-</div></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid; padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction contextRef="c109" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PaymentsToAcquireNotesReceivable" scale="0" unitRef="usd" id="ixv-31467">190,998</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction contextRef="c23" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PaymentsToAcquireNotesReceivable" scale="0" unitRef="usd" id="ixv-31468">3,809,003</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -9pt; padding-left: 27pt">Net cash provided by (used in) investing activities</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c21" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NetCashProvidedByUsedInInvestingActivities" scale="0" unitRef="usd" id="ixv-31469">18,296,176</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid; padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction contextRef="c109" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NetCashProvidedByUsedInInvestingActivities" scale="0" sign="-" unitRef="usd" id="ixv-31470">6,960,555</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction contextRef="c23" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NetCashProvidedByUsedInInvestingActivities" scale="0" sign="-" unitRef="usd" id="ixv-31471">20,700,859</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="font-weight: bold; text-align: left; text-indent: -9pt; padding-left: 9pt">Financing activities:</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -9pt; padding-left: 0.25in">Proceeds from issuance of long-term debt</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c21" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProceedsFromIssuanceOfLongTermDebt" scale="0" unitRef="usd" id="ixv-31472">28,000,000</ix:nonFraction></td><td style="text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-178">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c23" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProceedsFromIssuanceOfLongTermDebt" scale="0" unitRef="usd" id="ixv-31473">8,000,000</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; text-indent: -9pt; padding-left: 0.25in">Payment of debt issuance costs</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c21" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PaymentsOfDebtIssuanceCosts" scale="0" unitRef="usd" id="ixv-31474">808,992</ix:nonFraction></td><td style="text-align: left">)</td><td style="border-left: Black 1.5pt solid">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-179">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c23" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PaymentsOfDebtIssuanceCosts" scale="0" unitRef="usd" id="ixv-31475">3,000,000</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -9pt; padding-left: 0.25in">Repayments of long-term debt</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c21" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:RepaymentsOfLongTermDebt" scale="0" unitRef="usd" id="ixv-31476">319,297</ix:nonFraction></td><td style="text-align: left">)</td><td style="border-left: Black 1.5pt solid">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c109" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:RepaymentsOfLongTermDebt" scale="0" unitRef="usd" id="ixv-31477">3,000,000</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-180">-</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; text-indent: -9pt; padding-left: 0.25in">Member distributions</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-181">-</div></td><td style="text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-182">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c23" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PaymentsOfDistributionsToAffiliates" scale="0" unitRef="usd" id="ixv-31478">2,000,000</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -9pt; padding-left: 0.25in">Repayment of related party notes payable</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-183">-</div></td><td style="text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-184">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-185">-</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-bottom: 4pt; text-indent: -9pt; padding-left: 0.25in">Operating lease assets obtained in exchange for operating lease obligations</td><td style="padding-bottom: 4pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  </table><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">The accompanying notes are an integral part of
these consolidated financial statements.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>


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    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>EON RESOURCES INC.</b></p><div>

</div><div><a id="f_006"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>F/K/A HNR ACQUISITION CORP<br/>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;&#160;</p><div>

</div><ix:nonNumeric contextRef="c115" continuedAt="_NatureOfOperations-c115_cont_1" escape="true" name="us-gaap:NatureOfOperations" id="ixv-21758"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>NOTE 1&#160;&#8212;&#160;DESCRIPTION OF ORGANIZATION AND BUSINESS
OPERATIONS</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>&#160;</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>Organization and General</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">ENO Resources Inc. (f/k/a HNR Acquisition Corp)
(the &#8220;Company&#8221;) was incorporated in Delaware on December&#160;9, 2020. The Company was a blank check company formed for the
purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination
with one or more businesses (the &#8220;Business Combination&#8221;). The Company is an &#8220;emerging growth company,&#8221; as defined
in Section&#160;2(a)&#160;of the Securities Act&#160;of&#160;1933, as amended, or the &#8220;Securities Act,&#8221; as modified by the
Jumpstart Our Business Startups Act&#160;of&#160;2012 (the &#8220;JOBS Act&#8221;).</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The registration statement for the Company&#8217;s
IPO was declared effective on February 10, 2022 (the &#8220;Effective Date&#8221;). On February 15, 2022, the Company consummated the
IPO of <ix:nonFraction contextRef="c116" decimals="0" format="ixt:num-dot-decimal" name="hnra:UnitsIssuedDuringPeriodSharesNewIssues" scale="0" unitRef="shares" id="ixv-31503">7,500,000</ix:nonFraction> units (the &#8220;Units&#8221; and, with respect to the common stock included in the Units sold, the &#8220;Public Shares&#8221;),
at $<ix:nonFraction contextRef="c116" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:SharesIssuedPricePerShare" scale="0" unitRef="usdPershares" id="ixv-31504">10.00</ix:nonFraction> per Unit. Additionally, the underwriter fully exercised its option to purchase <ix:nonFraction contextRef="c116" decimals="0" format="ixt:num-dot-decimal" name="hnra:UnitsPurchasedDuringPeriodShares" scale="0" unitRef="shares" id="ixv-31505">1,125,000</ix:nonFraction> additional Units. Simultaneously with
the closing of the IPO, the Company consummated the sale of <ix:nonFraction contextRef="c117" decimals="0" format="ixt:num-dot-decimal" name="hnra:UnitsIssuedDuringPeriodSharesNewIssues" scale="0" unitRef="shares" id="ixv-31506">505,000</ix:nonFraction> units (the &#8220;Private Placement Units&#8221;) at a price of $<ix:nonFraction contextRef="c117" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:SaleOfStockPricePerShare" scale="0" unitRef="usdPershares" id="ixv-31507">10.00</ix:nonFraction>
per unit generating proceeds of $<ix:nonFraction contextRef="c118" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:SaleOfStockConsiderationReceivedOnTransaction" scale="0" unitRef="usd" id="ixv-31508">5,050,000</ix:nonFraction> in a private placement to HNRAC Sponsors, LLC, the Company&#8217;s sponsor (the &#8220;Sponsor&#8221;)
and EF Hutton (formerly Kingswood Capital Markets) (&#8220;EF Hutton&#8221;).</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Sponsor and other parties, purchased, in
the aggregate, <ix:nonFraction contextRef="c119" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CommonStockCapitalSharesReservedForFutureIssuance" scale="0" unitRef="shares" id="ixv-31509">505,000</ix:nonFraction> units (&#8220;Private Placement Units&#8221;) at a price of $<ix:nonFraction contextRef="c119" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:SharePrice" scale="0" unitRef="usdPershares" id="ixv-31510">10.00</ix:nonFraction> per Private Placement Unit in a private placement
which included a share of common stock and warrant to purchase three quarters of <ix:nonFraction contextRef="c119" decimals="0" format="ixt-sec:numwordsen" name="us-gaap:SharesIssued" scale="0" unitRef="shares" id="ixv-31511">one</ix:nonFraction> share of common stock at an exercise price of $<ix:nonFraction contextRef="c120" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:SharePrice" scale="0" unitRef="usdPershares" id="ixv-31512">11.50</ix:nonFraction>
per share, subject to certain adjustments (&#8220;Private Placement Warrants&#8221; and together, the &#8220;Private Placement&#8221;)
that occurred immediately prior to the Public Offering.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">Effective November 15,
2023, the Company completed its business combination as described in Note 3. Through its subsidiary Pogo Resources, LLC, a Texas limited
liability Company &#8220;(&#8220;Pogo&#8221; or &#8220;Pogo Resources&#8221;) and its subsidiary LH Operating, LLC, a Texas limited liability
company &#8220;(&#8220;LHO&#8221;), the Company is an independent oil and natural gas company focused on the acquisition, development,
exploration, and production of oil and natural gas properties in the Permian Basin. The Permian Basin is located in west Texas and southeastern
New Mexico and is characterized by high oil and liquids-rich natural gas content, multiple vertical and horizontal target horizons, extensive
production histories, long-lived reserves and historically high drilling success rates. The Company&#8217;s properties are in the Grayburg-Jackson
Field in Eddy County, New Mexico, which is a sub-area of the Permian Basin. The Company focuses exclusively on vertical development drilling.&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Inflation Reduction Act of 2022</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On August 16, 2022, the Inflation Reduction Act
of 2022 (the &#8220;IR Act&#8221;) was signed into federal law. The IR Act provides for, among other things, a new U.S. federal <ix:nonFraction contextRef="c121" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:EffectiveIncomeTaxRateContinuingOperations" scale="-2" unitRef="pure" id="ixv-31513">1</ix:nonFraction>% excise
tax on certain repurchases (including redemptions) of stock by publicly traded U.S. domestic corporations and certain U.S. domestic subsidiaries
of publicly traded foreign corporations occurring on or after January 1, 2023. The excise tax is imposed on the repurchasing corporation
itself, not its stockholders from which shares are repurchased. The amount of the excise tax is generally <ix:nonFraction contextRef="c122" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:EffectiveIncomeTaxRateContinuingOperations" scale="-2" unitRef="pure" id="ixv-31514">1</ix:nonFraction>% of the fair market value
of the shares repurchased at the time of the repurchase. However, for purposes of calculating the excise tax, repurchasing corporations
are permitted to net the fair market value of certain new stock issuances against the fair market value of stock repurchases during the
same taxable year. In addition, certain exceptions apply to the excise tax. The U.S. Department of the Treasury (the &#8220;Treasury&#8221;)
has been given authority to provide regulations and other guidance to carry out and prevent the abuse or avoidance of the excise tax.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Any redemption or other repurchase that occurs
after December 31, 2022, in connection with a Business Combination, extension vote or otherwise, may be subject to the excise tax. Whether
and to what extent the Company would be subject to the excise tax in connection with a Business Combination, extension vote or otherwise
would depend on a number of factors, including (i) the fair market value of the redemptions and repurchases in connection with the Business
Combination, extension or otherwise, (ii) the structure of a Business Combination, (iii) the nature and amount of any &#8220;PIPE&#8221;
or other equity issuances in connection with a Business Combination (or otherwise issued not in connection with a Business Combination
but issued within the same taxable year of a Business Combination) and (iv) the content of regulations and other guidance from the Treasury.
In addition, because the excise tax would be payable by the Company and not by the redeeming holder, the mechanics of any required payment
of the excise tax have not been determined. The foregoing could cause a reduction in the cash available on hand to complete a Business
Combination and in the Company&#8217;s ability to complete a Business Combination.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:nonNumeric><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;&#160;</p><div>

</div><ix:continuation id="_NatureOfOperations-c115_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On May 11, 2023, in connection with the stockholder
vote for the amendment to the Company&#8217;s certificate of incorporation, a total of <ix:nonFraction contextRef="c123" decimals="0" format="ixt:num-dot-decimal" name="hnra:NumberOfPublicShares" scale="0" unitRef="shares" id="ixv-31515">4,115,597</ix:nonFraction> Public Shares for an aggregate redemption
amount of $<ix:nonFraction contextRef="c124" decimals="0" format="ixt:num-dot-decimal" name="hnra:AggregateRedemptionValueOfPublicShares" scale="0" unitRef="usd" id="ixv-31516">43,318,207</ix:nonFraction> were redeemed from the Trust Account by the stockholders of the Company. On November 15, 2023, a total of <ix:nonFraction contextRef="c47" decimals="0" format="ixt:num-dot-decimal" name="hnra:NumberOfPublicShares" scale="0" unitRef="shares" id="ixv-31517">3,323,707</ix:nonFraction>
Public Shares were redeemed for an aggregate redemption amount of $<ix:nonFraction contextRef="c125" decimals="0" format="ixt:num-dot-decimal" name="hnra:AggregateRedemptionValueOfPublicShares" scale="0" unitRef="usd" id="ixv-31518">12,346,791</ix:nonFraction>. As a result of these redemptions of common stock, the
Company recognized an estimated liability for the excise tax of $<ix:nonFraction contextRef="c126" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ExciseAndSalesTaxes" scale="0" unitRef="usd" id="ixv-31519">474,837</ix:nonFraction>, included in <i>Accrued liabilities and other </i>on the Company&#8217;s
consolidated balance sheet pursuant to the <ix:nonFraction contextRef="c126" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:EffectiveIncomeTaxRateContinuingOperations" scale="-2" unitRef="pure" id="ixv-31520">1</ix:nonFraction>% excise tax under the IR Act partially offset by issuance of common stock subsequent to
the redemptions. The liability does not impact the consolidated statements of operations and is offset against accumulated deficit.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Going Concern Considerations </i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">At December 31, 2023, the Company had
$<ix:nonFraction contextRef="c127" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:Cash" scale="0" unitRef="usd" id="ixv-31521">3,505,454</ix:nonFraction> in cash and a working capital deficit of $<ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="hnra:WorkingCapital" scale="0" unitRef="usd" id="ixv-31522">13,300,601</ix:nonFraction>. These conditions raise substantial doubt about the Company&#8217;s
ability to continue as a going concern within one year after the date that the financial statements are issued. The Company had
positive cash flow from operations of $<ix:nonFraction contextRef="c128" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AssetsHeldInTrust" scale="0" unitRef="usd" id="ixv-31523">8,675,037</ix:nonFraction> for the year ended December 31, 2023, on a pro forma basis of the combined <ix:nonNumeric contextRef="c21" name="us-gaap:FinancialDesignationPredecessorAndSuccessorFixedList" id="ixv-31524">Successor</ix:nonNumeric>
and <ix:nonNumeric contextRef="c22" name="us-gaap:FinancialDesignationPredecessorAndSuccessorFixedList" id="ixv-31525">Predecessor</ix:nonNumeric> periods. Additionally, management&#8217;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. The Company has a three-year Common Stock Purchase Agreement with a maximum funding
limit of $<ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:RepurchaseAgreementCounterpartyAmountAtRisk" scale="0" unitRef="usd" id="ixv-31526">150,000,000</ix:nonFraction> that can fund the Company operations and production growth, and be used to reduce liabilities of the Company,
subject the Company&#8217;s Form S-1 Registration Statement, which is in the review process, being declared effective by the
Securities and Exchange Commission (&#8220;SEC&#8221;).</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.</p></ix:continuation><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;&#160;</p><div>

</div><ix:nonNumeric contextRef="c115" continuedAt="_SignificantAccountingPoliciesTextBlock-c115_cont_1" escape="true" name="us-gaap:SignificantAccountingPoliciesTextBlock" id="ixv-21809"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>NOTE 2&#160;&#8212;&#160;SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p>

<ix:nonNumeric contextRef="c115" continuedAt="_BasisOfAccounting-c115_cont_1" escape="true" name="us-gaap:BasisOfAccounting" id="ixv-21814"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Basis of Presentation</i></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation continuedAt="_BasisOfAccounting-c115_cont_2" id="_BasisOfAccounting-c115_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On November 15, 2023 (the &#8220;Closing Date&#8221;),
the Company consummated a business combination which resulted in the acquisition of Pogo Resources, LLC, a Texas limited liability
Company &#8220;(&#8220;Pogo&#8221; or &#8220;Pogo Resources&#8221;) and its subsidiary LH Operating, LLC, a Texas limited liability company
&#8220;(&#8220;LHO&#8221;, and collectively, the Pogo Business&#8221;) (the &#8220;Acquisition&#8221;). The Company was deemed the accounting
acquirer in the Acquisition based on an analysis of the criteria outlined in Accounting Standards Codification (&#8220;ASC&#8221;) 805,
Business Combinations, and the Pogo Business was deemed to be the Predecessor entity. Accordingly, the historical consolidated financial
statements of the Pogo Business became the historical financial statements of the Company&#8217;s upon consummation of the Acquisition.
As a result, the financial statements included in this report reflect (i) the historical operating results of Pogo Business prior to
the Acquisition (&#8220;Predecessor&#8221;) and (ii) the combined results of the companies, including Pogo Business following the closing
of the Acquisition (&#8220;Successor&#8221;). The accompanying financial statements include a Predecessor period, which was the period
January 1, 2023 through November 14, 2023, concurrent with completion of the Acquisition and Successor period from November 15, 2023
through December 31, 2023. As a result of the Acquisition, the results of operations, financial position and cash flows of the Predecessor
and Successor may not be directly comparable. A black-line between the Successor and Predecessor periods has been placed in the consolidated
financial statements and in the tables to the notes to the consolidated financial statements to highlight the lack of comparability between
these two periods as the Acquisition resulted in a new basis of accounting for the Pogo Business. See Note 3 for additional information.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation></ix:nonNumeric><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c115_cont_2" id="_SignificantAccountingPoliciesTextBlock-c115_cont_1"><ix:continuation id="_BasisOfAccounting-c115_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The accompanying financial statements are presented
in U.S. dollars in conformity with accounting principles generally accepted in the United States of America (&#8220;U.S. GAAP&#8221;)
and pursuant to the rules and regulations of the SEC.<i>&#160;</i></p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p>

<ix:nonNumeric contextRef="c115" continuedAt="_ConsolidationPolicyTextBlock-c115_cont_1" escape="true" name="us-gaap:ConsolidationPolicyTextBlock" id="ixv-21842"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Principles of Consolidation</i></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation id="_ConsolidationPolicyTextBlock-c115_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The accompanying consolidated financial statements
include the accounts of the Company and its subsidiaries. All significant intercompany balances and transactions have been eliminated
in consolidation.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:nonNumeric contextRef="c115" continuedAt="hnra_EmergingGrowthCompanyPolicyTextBlock-c115_cont_1" escape="true" name="hnra:EmergingGrowthCompanyPolicyTextBlock" id="ixv-21849"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Emerging Growth Company</i></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation id="hnra_EmergingGrowthCompanyPolicyTextBlock-c115_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Section&#160;102(b)(1)&#160;of the JOBS Act exempts
emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that
is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered
under the Securities Exchange&#160;Act&#160;of&#160;1934) are required to comply with the new or revised financial accounting standards.
The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply
to non-emerging growth companies but any such an election to opt out is irrevocable. The Company has elected not to opt out of such extended
transition period which means that when a standard is issued or revised and it has different application dates for public or private
companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the
new or revised standard. This may make comparison of the Company&#8217;s consolidated financial statements with another public company
which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period
difficult or impossible because of the potential differences in accounting standards used.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:nonNumeric contextRef="c115" continuedAt="_EarningsPerSharePolicyTextBlock-c115_cont_1" escape="true" name="us-gaap:EarningsPerSharePolicyTextBlock" id="ixv-21856"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Net Income (Loss) Per Share:</i></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation continuedAt="_EarningsPerSharePolicyTextBlock-c115_cont_2" id="_EarningsPerSharePolicyTextBlock-c115_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Net income (loss) per share of common stock is
computed by dividing net income (loss) applicable to common stockholders by the weighted average number of shares of common stock outstanding
during the period, excluding shares of common stock subject to forfeiture.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;&#160;</p>

<ix:continuation continuedAt="_EarningsPerSharePolicyTextBlock-c115_cont_3" id="_EarningsPerSharePolicyTextBlock-c115_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company&#8217;s Class B Common shares do
not have economic rights to the undistributed earnings of the Company, and are not considered participating securities under ASC 260.
As such, they are excluded from the calculation of net income (loss) per common share.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation id="_EarningsPerSharePolicyTextBlock-c115_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company has not considered the effect of
the warrants sold in the Initial Public Offering and private placement warrants to purchase an aggregate of&#160;<ix:nonFraction contextRef="c115" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ConversionOfStockSharesConverted1" scale="0" unitRef="shares" id="ixv-31527">6,847,500</ix:nonFraction>&#160;shares
and warrants to purchase <ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ClassOfWarrantOrRightNumberOfSecuritiesCalledByWarrantsOrRights" scale="0" unitRef="shares" id="ixv-31528">4,094,250</ix:nonFraction> shares issued in connection with Private Notes Payable in the calculation of diluted income per share,
since the effective of those instruments would be anti-dilutive.&#160;As a result, diluted income (loss) per share of common stock is
the same as basic loss per share of common stock for the period presented.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<ix:nonNumeric contextRef="c115" continuedAt="_UseOfEstimates-c115_cont_1" escape="true" name="us-gaap:UseOfEstimates" id="ixv-21869"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><i>Use of Estimates</i></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation id="_UseOfEstimates-c115_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The preparation of financial statements in conformity
with GAAP requires the Company&#8217;s management to make estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Significant estimates and assumptions reflected in the financial statements include: i) estimates
of proved reserves of oil and natural gas, which affect the calculation of depletion, depreciation, and amortization (&#8220;DD&amp;A&#8221;)
and impairment of proved oil and natural gas properties, ii) impairment of undeveloped properties and other assets, iii) depreciation
of property and equipment; and iv) the valuation of commodity derivative instruments. These estimates are based on information available
as of the date of the financial statements; therefore, actual results could differ materially from management&#8217;s estimates using
different assumptions or under different conditions. Future production may vary materially from estimated oil and natural gas proved
reserves. Actual future prices may vary significantly from price assumptions used for determining proved reserves and for financial reporting.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>&#160;</i></p>

<ix:nonNumeric contextRef="c115" continuedAt="_CashAndCashEquivalentsPolicyTextBlock-c115_cont_1" escape="true" name="us-gaap:CashAndCashEquivalentsPolicyTextBlock" id="ixv-21877"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>Cash</i></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation id="_CashAndCashEquivalentsPolicyTextBlock-c115_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company considers all cash on hand, depository
accounts held by banks, money market accounts and investments with an original maturity of three months or less to be cash equivalents.
The Company&#8217;s cash and cash equivalents are held in financial institutions in amounts that exceed the insurance limits of the Federal
Deposit Insurance Corporation. The Company believes its counterparty risks are minimal based on the reputation and history of the institutions
selected.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><i>&#160;</i></p>

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consist of receivables from crude oil and natural gas purchasers and are generally uncollateralized. Accounts receivables are typically
due within 30 to 60&#160;days of the production date and 30&#160;days of the billing date and are stated at amounts due from purchasers
and industry partners. Amounts are considered past due if they have been outstanding for 60&#160;days or more. No interest is typically
charged on past due amounts.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

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its need for an allowance for doubtful accounts on a periodic basis and determines the allowance, if any, by considering the length of
time past due, previous loss history, future net revenues associated with the debtor&#8217;s ownership interest in oil and natural gas
properties operated by the Company and the debtor&#8217;s ability to pay its obligations, among other things. The Company believes its
accounts receivable are fully collectible. Accordingly, no allowance for doubtful accounts has been provided.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<ix:continuation id="_TradeAndOtherAccountsReceivablePolicy-c115_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">As of December&#160;31,
2023 and 2022, the Company had approximately <ix:nonFraction contextRef="c129" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:ConcentrationRiskPercentage1" scale="-2" unitRef="pure" id="ixv-31529">96</ix:nonFraction>% and <ix:nonFraction contextRef="c130" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:ConcentrationRiskPercentage1" scale="-2" unitRef="pure" id="ixv-31530">93</ix:nonFraction>% of accounts receivable with two customers, respectively.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

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Gas Properties</i></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<ix:continuation continuedAt="_OilAndGasPropertiesPolicyPolicyTextBlock-c115_cont_2" id="_OilAndGasPropertiesPolicyPolicyTextBlock-c115_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">The Company accounts
for its crude oil and natural gas properties under the successful efforts method of accounting. Under this method, costs of proved developed
producing properties, successful exploratory wells and developmental dry hole costs are capitalized. Internal costs that are directly
related to acquisition and development activities, including salaries and benefits, are capitalized. Internal costs related to production
and similar activities are expensed as incurred. Capitalized costs are depleted by the unit-of-production method based on estimated proved
developed producing reserves. The Company calculates quarterly depletion expense by using the estimated prior period-end reserves as
the denominator. The process of estimating and evaluating crude oil and natural gas reserves is complex, requiring significant decisions
in the evaluation of available geological, geophysical, engineering, and economic data. The data for a given property may also change
substantially over time because of numerous factors, including additional development activity, evolving production history and a continual
reassessment of the viability of production under changing economic conditions. As a result, revisions in existing reserve estimates
occur. Capitalized development costs of producing oil and natural gas properties are depleted over proved developed reserves and leasehold
costs are depleted over total proved reserves. Upon the sale or retirement of significant portions of or complete fields of depreciable
or depletable property, the net book value thereof, less proceeds or salvage value, is recognized as a gain or loss.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

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geological and geophysical expenses, seismic costs on unproved leaseholds and delay rentals are expensed as incurred. Exploratory well
drilling costs, including the cost of stratigraphic test wells, are initially capitalized, but charged to expense if the well is determined
to be economically nonproductive. The status of each in-progress well is reviewed quarterly to determine the proper accounting treatment
under the successful efforts method of accounting. Exploratory well costs continue to be capitalized so long as the Company has identified
a sufficient quantity of reserves to justify completion as a producing well, is making sufficient progress assessing reserves with economic
and operating viability, and the Company remains unable to make a final determination of productivity.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<ix:continuation continuedAt="_OilAndGasPropertiesPolicyPolicyTextBlock-c115_cont_4" id="_OilAndGasPropertiesPolicyPolicyTextBlock-c115_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">If an in-progress exploratory
well is found to be economically unsuccessful prior to the issuance of the financial statements, the costs incurred prior to the end
of the reporting period are charged to exploration expense. If the Company is unable to make a final determination about the productive
status of a well prior to issuance of the financial statements, the costs associated with the well are classified as suspended well costs
until the Company has had sufficient time to conduct additional completion or testing operations to evaluate the pertinent geological
and engineering data obtained. At the time the Company can make a final determination of a well&#8217;s productive status, the well is
removed from suspended well status and the resulting accounting treatment is recorded.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p><div>

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period from January 1, 2023 to November 14, 2023 and $<ix:nonFraction contextRef="c23" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DepreciationDepletionAndAmortization" scale="0" unitRef="usd" id="ixv-31533">1,613,402</ix:nonFraction> for the year ended December&#160;31, 2022.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><b><i>&#160;</i></b></p>

<ix:nonNumeric contextRef="c115" continuedAt="_ImpairmentOrDisposalOfLongLivedAssetsPolicyTextBlock-c115_cont_1" escape="true" name="us-gaap:ImpairmentOrDisposalOfLongLivedAssetsPolicyTextBlock" id="ixv-21948"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><i>Impairment of Oil
and Gas Properties</i></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<ix:continuation continuedAt="_ImpairmentOrDisposalOfLongLivedAssetsPolicyTextBlock-c115_cont_2" id="_ImpairmentOrDisposalOfLongLivedAssetsPolicyTextBlock-c115_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">Proved oil and natural
gas properties are reviewed for impairment when events and circumstances indicate a possible decline in the recoverability of the carrying
amount of such property. The Company estimates the expected future cash flows of its oil and natural gas properties and compares the
undiscounted cash flows to the carrying amount of the oil and natural gas properties, on a field-by-field basis, to determine if the
carrying amount is recoverable. If the carrying amount exceeds the estimated undiscounted future cash flows, the Company will write down
the carrying amount of the oil and natural gas properties to estimated fair value.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<ix:continuation id="_ImpairmentOrDisposalOfLongLivedAssetsPolicyTextBlock-c115_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">The Company and the
Predecessor did not recognize any impairment of oil and natural gas properties in the periods presented.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<ix:nonNumeric contextRef="c115" continuedAt="_AssetRetirementObligationsPolicy-c115_cont_1" escape="true" name="us-gaap:AssetRetirementObligationsPolicy" id="ixv-21958"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><i>Asset Retirement
Obligations</i></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<ix:continuation id="_AssetRetirementObligationsPolicy-c115_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">The Company recognizes
the fair value of an asset retirement obligation (&#8220;ARO&#8221;) in the period in which it is incurred if a reasonable estimate of
fair value can be made. The asset retirement obligation is recorded as a liability at its estimated present value, with an offsetting
increase recognized in oil and natural gas properties on the consolidated balance sheets. Periodic accretion of the discounted value
of the estimated liability is recorded as an expense in the consolidated statements of operations.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><b>&#160;</b></p>

<ix:nonNumeric contextRef="c115" continuedAt="_PropertyPlantAndEquipmentPolicyTextBlock-c115_cont_1" escape="true" name="us-gaap:PropertyPlantAndEquipmentPolicyTextBlock" id="ixv-21966"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><i>Other Property and
Equipment, net</i></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<ix:continuation continuedAt="_PropertyPlantAndEquipmentPolicyTextBlock-c115_cont_2" id="_PropertyPlantAndEquipmentPolicyTextBlock-c115_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">Other property and equipment
are recorded at cost. Other property and equipment are depreciated over its estimated useful life on a straight-line basis. The Company
expenses maintenance and repairs in the period incurred. Upon retirements or dispositions of assets, the cost and related accumulated
depreciation are removed from the consolidated balance sheet with the resulting gains or losses, if any, reflected in operations.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<ix:continuation continuedAt="_PropertyPlantAndEquipmentPolicyTextBlock-c115_cont_3" id="_PropertyPlantAndEquipmentPolicyTextBlock-c115_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">Materials and supplies
are stated at the lower of cost or market and consist of oil and gas drilling or repair items such a tubing, casing, and pumping units.
These items are primarily acquired for use in future drilling or repair operations and are carried at lower of cost or market.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<ix:continuation id="_PropertyPlantAndEquipmentPolicyTextBlock-c115_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">The Company reviews
its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. If such assets are considered impaired, the impairment to be recorded is measured by the amount by which the carrying
amount of the asset exceeds its estimated fair value. The estimated fair value is determined using either a discounted future cash flow
model or another appropriate fair value method.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<ix:nonNumeric contextRef="c115" continuedAt="_DerivativesPolicyTextBlock-c115_cont_1" escape="true" name="us-gaap:DerivativesPolicyTextBlock" id="ixv-21979"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><i>Derivative Instruments</i></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<ix:continuation continuedAt="_DerivativesPolicyTextBlock-c115_cont_2" id="_DerivativesPolicyTextBlock-c115_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">The Company uses derivative
financial instruments to mitigate its exposure to commodity price risk associated with oil prices. The Company&#8217;s derivative financial
instruments are recorded on the consolidated balance sheets as either an asset or a liability measured at fair value. The Company has
elected not to apply hedge accounting for its existing derivative financial instruments, and as a result, the Company recognizes the
change in derivative fair value between reporting periods currently in its consolidated statements of operations. The fair value of the
Company&#8217;s derivative financial instruments is determined using industry-standard models that consider various inputs including:
(i)&#160;quoted forward prices for commodities, (ii)&#160;time value of money and (iii)&#160;current market and contractual prices for
the underlying instruments, as well as other relevant economic measures. Realized gains and losses from the settlement of derivative
financial instruments and unrealized gains and unrealized losses from valuation changes in the remaining unsettled derivative financial
instruments are reported in a single line item as a component of revenues in the consolidated statements of operations. Cash flows from
derivative contract settlements are reflected in operating activities in the accompanying consolidated statements of cash flows. See
Note&#160;4 for additional information about the Company&#8217;s derivative instruments.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c115_cont_5" id="_SignificantAccountingPoliciesTextBlock-c115_cont_4"><ix:continuation continuedAt="_DerivativesPolicyTextBlock-c115_cont_3" id="_DerivativesPolicyTextBlock-c115_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">The Company&#8217;s
credit risk related to derivatives is a counterparties&#8217; failure to perform under derivative contracts owed to the Company. The
Company uses credit and other financial criteria to evaluate the credit standing of, and to select, counterparties to its derivative
instruments. Although the Company does not obtain collateral or otherwise secure the fair value of its derivative instruments, associated
credit risk is mitigated by the Company&#8217;s credit risk policies and procedures.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<ix:continuation id="_DerivativesPolicyTextBlock-c115_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">The Company has entered
into International Swap Dealers Association Master Agreements (&#8220;ISDA Agreements&#8221;) with its derivative counterparty. The terms
of the ISDA Agreements provide the Company and the counterparty with rights of set off upon the occurrence of defined acts of default
by either the Company or a counterparty to a derivative, whereby the party not in default may set off all derivative liabilities owed
to the defaulting party against all derivative asset receivables from the defaulting party.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<ix:nonNumeric contextRef="c115" continuedAt="_RevenueFromContractWithCustomerPolicyTextBlock-c115_cont_1" escape="true" name="us-gaap:RevenueFromContractWithCustomerPolicyTextBlock" id="ixv-22008"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><i>Product Revenues</i></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<ix:continuation continuedAt="_RevenueFromContractWithCustomerPolicyTextBlock-c115_cont_2" id="_RevenueFromContractWithCustomerPolicyTextBlock-c115_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">The Company accounts
for sales in accordance with Accounting Standards Codification (&#8220;ASC&#8221;) 606,&#160;<i>Revenue from Contracts with Customers</i>.
Revenue is recognized when the Company satisfies a performance obligation in an amount reflecting the consideration to which it expects
to be entitled. The Company applies a five-step approach in determining the amount and timing of revenue to be recognized: (1)&#160;identifying
the contract with a customer; (2)&#160;identifying the performance obligations in the contract; (3)&#160;determining the transaction
price; (4)&#160;allocating the transaction price to the performance obligations in the contract; and (5)&#160;recognizing revenue when
the performance obligation is satisfied.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<ix:continuation continuedAt="_RevenueFromContractWithCustomerPolicyTextBlock-c115_cont_3" id="_RevenueFromContractWithCustomerPolicyTextBlock-c115_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">The Company enters into
contracts with customers to sell its oil and natural gas production. Revenue from these contracts is recognized when the Company&#8217;s
performance obligations under these contracts are satisfied, which generally occurs with the transfer of control of the oil and natural
gas to the purchaser. Control is generally considered transferred when the following criteria are met: (i)&#160;transfer of physical
custody, (ii)&#160;transfer of title, (iii)&#160;transfer of risk of loss and (iv)&#160;relinquishment of any repurchase rights or other
similar rights. Given the nature of the products sold, revenue is recognized at a point in time based on the amount of consideration
the Company expects to receive in accordance with the price specified in the contract. Consideration under oil and natural gas marketing
contracts is typically received from the purchaser one to two&#160;months after production.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<ix:continuation continuedAt="_RevenueFromContractWithCustomerPolicyTextBlock-c115_cont_4" id="_RevenueFromContractWithCustomerPolicyTextBlock-c115_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">Most of the Company&#8217;s
oil marketing contracts transfer physical custody and title at or near the wellhead or a central delivery point, which is generally when
control of the oil has been transferred to the purchaser. The majority of the oil produced is sold under contracts using market-based
pricing, which price is then adjusted for differentials based upon delivery location and oil quality. To the extent the differentials
are incurred at or after the transfer of control of the oil, the differentials are included in oil revenues on the statements of operations,
as they represent part of the transaction price of the contract. If other related costs are incurred prior to the transfer of control
of the oil, those costs are included in production taxes, transportation and processing expenses on the Company&#8217;s consolidated
statements of operations, as they represent payment for services performed outside of the contract with the customer.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<ix:continuation continuedAt="_RevenueFromContractWithCustomerPolicyTextBlock-c115_cont_5" id="_RevenueFromContractWithCustomerPolicyTextBlock-c115_cont_4"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">The Company&#8217;s
natural gas is sold at the lease location. Most of the Company&#8217;s natural gas is sold under gas purchase agreements. Under the gas
purchase agreements, the Company receives a percentage of the net production from the sale of the natural gas and residue gas, less associated
expenses incurred by the buyer.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<ix:continuation id="_RevenueFromContractWithCustomerPolicyTextBlock-c115_cont_5"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">The Company does not
disclose the value of unsatisfied performance obligations under its contracts with customers as it applies the practical expedient in
accordance with ASC&#160;606. The expedient, as described in ASC&#160;606-10-50-14(a), applies to variable consideration that is recognized
as control of the product is transferred to the customer. Since each unit of product represents a separate performance obligation, future
volumes are wholly unsatisfied, and disclosure of the transaction price allocated to remaining performance obligations is not required.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><i>&#160;</i></p>

<ix:nonNumeric contextRef="c115" continuedAt="_MajorCustomersPolicyPolicyTextBlock-c115_cont_1" escape="true" name="us-gaap:MajorCustomersPolicyPolicyTextBlock" id="ixv-22029"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><i>Customers</i></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

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of its crude oil and natural gas production to two customers for the&#160;years ended December&#160;31, 2023, and 2022. Inherent to the
industry is the concentration of crude oil, natural gas and natural gas liquids (&#8220;NGLs&#8221;) sales to a limited number of customers.
This concentration has the potential to impact the Company&#8217;s overall exposure to credit risk in that its customers may be similarly
affected by changes in economic and financial conditions, commodity prices or other conditions. Given the liquidity in the market for
the sale of hydrocarbons, the Company believes the loss of any single purchaser, or the aggregate loss of several purchasers, could be
managed by selling to alternative purchasers in the operating areas.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><i>&#160;</i></p><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c115_cont_6" id="_SignificantAccountingPoliciesTextBlock-c115_cont_5"><ix:nonNumeric contextRef="c115" continuedAt="_StandardProductWarrantyPolicy-c115_cont_1" escape="true" name="us-gaap:StandardProductWarrantyPolicy" id="ixv-22053"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><i>Warranty Obligations</i></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<ix:continuation id="_StandardProductWarrantyPolicy-c115_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">The Company provides
an assurance-type warranty that guarantees its products comply with agreed-upon specifications. This warranty is not sold separately
and does not convey any additional goods or services to the customer; therefore, the warranty is not considered a separate performance
obligation. As the Company typically incurs minimal claims under the warranties, no liability is estimated at the time goods are delivered,
but rather at the point of a claim.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><b>&#160;</b></p>

<ix:nonNumeric contextRef="c115" continuedAt="hnra_OtherRevenuePolicyTextBlock-c115_cont_1" escape="true" name="hnra:OtherRevenuePolicyTextBlock" id="ixv-22061"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><i>Other Revenue</i></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<ix:continuation id="hnra_OtherRevenuePolicyTextBlock-c115_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">Other revenue is generated
from the fees the Company charges a single customer for the disposal of water, saltwater, brine, brackish water, and other water (collectively,
&#8220;Water&#8221;) into the Company&#8217;s water injection system. Revenue recognized under the agreement is variable in nature and
primarily based on the volume of Water accepted during the period.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<ix:nonNumeric contextRef="c115" continuedAt="hnra_WarrantLiabilitiesPolicyTextBlock-c115_cont_1" escape="true" name="hnra:WarrantLiabilitiesPolicyTextBlock" id="ixv-22068"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><i>Warrant Liabilities</i></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; ">&#160;</p>

<ix:continuation continuedAt="hnra_WarrantLiabilitiesPolicyTextBlock-c115_cont_2" id="hnra_WarrantLiabilitiesPolicyTextBlock-c115_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company accounts for warrants as either equity-classified
or liability-classified instruments based on an assessment of the warrant&#8217;s specific terms and applicable authoritative guidance
in Financial Accounting Standards Board (&#8220;FASB&#8221;) Accounting Standards Codification ASC 480, Distinguishing Liabilities from
Equity (&#8220;ASC 480&#8221;) and ASC 815, Derivatives and Hedging (&#8220;ASC 815&#8221;). The assessment considers whether the warrants
are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants
meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company&#8217;s
own common stock, among other conditions for equity classification. This assessment is conducted at the time of warrant issuance and
as of each subsequent quarterly period end date while the warrants are outstanding.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<ix:continuation id="hnra_WarrantLiabilitiesPolicyTextBlock-c115_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">In accordance with Accounting
Standards Codification ASC 815-40, Derivatives and Hedging&#8212;Contracts in Entity&#8217;s Own Equity, the warrants issued in connection
with the Private Notes Payable do not meet the criteria for equity classification due to the redemption right whereby the holder may
require the Company to settle the warrant in cash 18 months after the closing of the MIPA, and must be recorded as liabilities. The warrants
are measured at fair value at inception and at each reporting date in accordance with ASC 820<i>, Fair Value Measurement</i>, with changes
in fair value recognized in the statements of operations in the period of change.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

<ix:nonNumeric contextRef="c115" continuedAt="_RepurchaseAgreementsValuationPolicy-c115_cont_1" escape="true" name="us-gaap:RepurchaseAgreementsValuationPolicy" id="ixv-22079"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; "><i>Forward Purchase Agreement Valuation</i></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<ix:continuation id="_RepurchaseAgreementsValuationPolicy-c115_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">The Company has determined
that the FPA Put Option, including the Maturity Consideration, within the Forward Purchase Agreement is (i) a freestanding financial
instrument and (ii) a liability (i.e., an in-substance written put option). This liability was recorded as a liability at fair value
on the consolidated balance sheet as of the reporting date in accordance with ASC 480. The fair value of the liability was estimated
using a Monte-Carlo Simulation in a risk-neutral framework. Specifically, the future stock price is simulated assuming a Geometric Brownian
Motion (&#8220;GBM&#8221;). For each simulated path, the forward purchase value is calculated based on the contractual terms and then
discounted back to present. Finally, the value of the forward is calculated as the average present value over all simulated paths. The
model also considered the likelihood of a dilutive offering of common stock.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>&#160;</i></p>

<ix:nonNumeric contextRef="c115" continuedAt="_ConcentrationRiskCreditRisk-c115_cont_1" escape="true" name="us-gaap:ConcentrationRiskCreditRisk" id="ixv-22087"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>Concentration of Credit Risk:</i></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p>

<ix:continuation id="_ConcentrationRiskCreditRisk-c115_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Financial instruments that potentially subject the Company to concentrations
of credit risk consist of a cash account in a financial institution, which, at times, may exceed the Federal Depository Insurance Coverage
(&#8220;FDIC&#8221;) of $<ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CashFDICInsuredAmount" scale="0" unitRef="usd" id="ixv-31536">250,000</ix:nonFraction>. As of December 31, 2023, the Company&#8217;s cash balance exceeded the FDIC limit by $<ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CashUninsuredAmount" scale="0" unitRef="usd" id="ixv-31537">342,901</ix:nonFraction>. At December
31, 2023, the Company had not experienced losses on this account and management believes the Company is not exposed to significant risks
on such account.&#160;</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p></ix:continuation></ix:continuation><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:continuation id="_SignificantAccountingPoliciesTextBlock-c115_cont_6"><ix:nonNumeric contextRef="c115" continuedAt="_IncomeTaxPolicyTextBlock-c115_cont_1" escape="true" name="us-gaap:IncomeTaxPolicyTextBlock" id="ixv-22112"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Income Taxes</i></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation continuedAt="_IncomeTaxPolicyTextBlock-c115_cont_2" id="_IncomeTaxPolicyTextBlock-c115_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company follows the asset and liability method
of accounting for income taxes under FASB ASC&#160;740, &#8220;Income Taxes.&#8221; Deferred tax assets and liabilities are recognized
for the estimated future tax consequences attributable to differences between the financial statements carrying amounts of existing assets
and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to
apply to taxable income in the&#160;years in which those temporary differences are expected to be recovered or settled. The effect on
deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date.
Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation continuedAt="_IncomeTaxPolicyTextBlock-c115_cont_3" id="_IncomeTaxPolicyTextBlock-c115_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">FASB ASC&#160;740 prescribes a recognition threshold
and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in
a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing
authorities. There were no unrecognized tax benefits as of December 31, 2023 and 2022. The Company recognizes accrued interest and penalties
related to unrecognized tax benefits as income tax expense. No amounts were accrued for the payment of interest and penalties at December
31, 2023 and 2022. The Company is currently not aware of any issues under review that could result in significant payments, accruals,
or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation id="_IncomeTaxPolicyTextBlock-c115_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Prior the closing of the Acquisition, the Predecessor
elected to be treated as a partnership for income tax purposes and was not subject to federal, state, or local income taxes. Any taxable
income or loss was recognized by the owners. Accordingly, no federal, state, or local income taxes have been reflected in the accompanying
consolidated financial statements of the Predecessor. Significant differences may exist between the results of operations reported in
these consolidated financial statements and those determined for income tax purposes primarily due to the use of different asset valuation
methods for tax purposes.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;&#160;</p>

<ix:nonNumeric contextRef="c115" continuedAt="_NewAccountingPronouncementsPolicyPolicyTextBlock-c115_cont_1" escape="true" name="us-gaap:NewAccountingPronouncementsPolicyPolicyTextBlock" id="ixv-22125"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Recent Accounting Pronouncements</i></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation continuedAt="_NewAccountingPronouncementsPolicyPolicyTextBlock-c115_cont_2" id="_NewAccountingPronouncementsPolicyPolicyTextBlock-c115_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In August 2020, the Financial Accounting Standards
Board (&#8220;FASB&#8221;) issued Accounting Standards Update (&#8220;ASU&#8221;) 2020-06, Debt-Debt with Conversion and Other Options
(Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity&#8217;s Own Equity (Subtopic 815-40) (&#8220;ASU 2020-06&#8221;) to
simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial
conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining
to equity classification of contracts in an entity&#8217;s own equity. The new standard also introduces additional disclosures for convertible
debt and freestanding instruments that are indexed to and settled in an entity&#8217;s own equity. ASU 2020-06 amends the diluted earnings
per share guidance, including the requirement to use the if-converted method for all convertible instruments. The Company adopted this
guidance early on January 1, 2023 with no impact to the Company&#8217;s consolidated financial statements.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation id="_NewAccountingPronouncementsPolicyPolicyTextBlock-c115_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Management does not believe that any recently
issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company&#8217;s consolidated
financial statements.</p></ix:continuation></ix:continuation><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><ix:nonNumeric contextRef="c115" continuedAt="_BusinessCombinationDisclosureTextBlock-c115_cont_1" escape="true" name="us-gaap:BusinessCombinationDisclosureTextBlock" id="ixv-22138"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>NOTE 3 &#8212; BUSINESS
COMBINATION</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company entered into that certain Amended
and Restated Membership Interest Purchase Agreement, dated as of August 28, 2023 (as amended, the &#8220;MIPA&#8221;), by and among the
Company, HNRA Upstream, LLC, a newly formed Delaware limited liability company which is managed by, and is a subsidiary of, the Company
(&#8220;OpCo&#8221;), and HNRA Partner, Inc., a newly formed Delaware corporation and wholly owned subsidiary of OpCo (&#8220;SPAC Subsidiary&#8221;,
and together with the Company and OpCo, &#8220;Buyer&#8221; and each a &#8220;Buyer&#8221;), CIC Pogo LP, a Delaware limited partnership
(&#8220;CIC&#8221;), DenCo Resources, LLC, a Texas limited liability company (&#8220;DenCo&#8221;), Pogo Resources Management, LLC, a
Texas limited liability company (&#8220;Pogo Management&#8221;), 4400 Holdings, LLC, a Texas limited liability company (&#8220;4400&#8221;
and, together with CIC, DenCo and Pogo Management, collectively, &#8220;Seller&#8221; and each a &#8220;Seller&#8221;), and, solely with
respect to Section 6.20 of the MIPA, the Sponsor.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:nonNumeric><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->14<!-- Field: /Sequence --></span></p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:continuation continuedAt="_BusinessCombinationDisclosureTextBlock-c115_cont_2" id="_BusinessCombinationDisclosureTextBlock-c115_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On November 15, 2023 (the &#8220;Closing Date&#8221;),
as contemplated by the MIPA:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.25in"/><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company filed a Second Amended and Restated Certificate of Incorporation (the &#8220;Second A&amp;R Charter&#8221;) with the Secretary
of State of the State of Delaware, pursuant to which the number of authorized shares of the Company&#8217;s capital stock, par value
$<ix:nonFraction contextRef="c133" decimals="4" format="ixt:num-dot-decimal" name="us-gaap:BusinessAcquisitionSharePrice" scale="0" unitRef="usdPershares" id="ixv-31538">0.0001</ix:nonFraction> per share, was increased to <ix:nonFraction contextRef="c134" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:BusinessAcquisitionEquityInterestsIssuedOrIssuableNumberOfSharesIssued" scale="0" unitRef="shares" id="ixv-31539">121,000,000</ix:nonFraction> shares, consisting of (i) <ix:nonFraction contextRef="c135" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:BusinessAcquisitionEquityInterestsIssuedOrIssuableNumberOfSharesIssued" scale="0" unitRef="shares" id="ixv-31540">100,000,000</ix:nonFraction> shares of Class A common stock, par value $<ix:nonFraction contextRef="c136" decimals="4" format="ixt:num-dot-decimal" name="us-gaap:BusinessAcquisitionSharePrice" scale="0" unitRef="usdPershares" id="ixv-31541">0.0001</ix:nonFraction>
per share (the &#8220;Class A Common Stock&#8221;), (ii) <ix:nonFraction contextRef="c137" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:BusinessAcquisitionEquityInterestsIssuedOrIssuableNumberOfSharesIssued" scale="0" unitRef="shares" id="ixv-31542">20,000,000</ix:nonFraction> shares of Class B common stock, par value $<ix:nonFraction contextRef="c138" decimals="4" format="ixt:num-dot-decimal" name="us-gaap:BusinessAcquisitionSharePrice" scale="0" unitRef="usdPershares" id="ixv-31543">0.0001</ix:nonFraction> per share (the
&#8220;Class B Common Stock&#8221;), and (iii) <ix:nonFraction contextRef="c139" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:BusinessAcquisitionEquityInterestsIssuedOrIssuableNumberOfSharesIssued" scale="0" unitRef="shares" id="ixv-31544">1,000,000</ix:nonFraction> shares of preferred stock, par value $<ix:nonFraction contextRef="c140" decimals="4" format="ixt:num-dot-decimal" name="us-gaap:BusinessAcquisitionSharePrice" scale="0" unitRef="usdPershares" id="ixv-31545">0.0001</ix:nonFraction> per share;</span></td>
</tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.25in"/><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
current shares of common stock of the Company were reclassified as Class A Common Stock, the Class B Common Stock have no economic rights
but entitles its holder to one vote on all matters to be voted on by stockholders generally, holders of shares of Class A Common Stock
and shares of Class B Common Stock will vote together as a single class on all matters presented to our stockholders for their vote or
approval, except as otherwise required by applicable law or by the Second A&amp;R Charter;</span></td>
</tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.25in"/><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(A)
The Company contributed to OpCo (i) all of its assets (excluding its interests in OpCo and the aggregate amount of cash required to satisfy
any exercise by the Company&#8217;s stockholders of their Redemption Rights (as defined below)) and (ii) <ix:nonFraction contextRef="c141" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:BusinessAcquisitionEquityInterestsIssuedOrIssuableNumberOfSharesIssued" scale="0" unitRef="shares" id="ixv-31546">2,000,000</ix:nonFraction> newly issued shares
of Class B Common Stock (such shares, the &#8220;Seller Class B Shares&#8221;) and (B) in exchange therefor, OpCo issued to the Company
a number of Class A common units of OpCo (the &#8220;OpCo Class A Units&#8221;) equal to the number of total shares of Class A Common
Stock issued and outstanding immediately after the closing (the &#8220;Closing&#8221;) of the transactions (the &#8220;Transactions&#8221;)
contemplated by the Company (following the exercise by the Company&#8217;s stockholders of their Redemption Rights) (such transactions,
the &#8220;SPAC Contribution&#8221;);</span></td>
</tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.25in"/><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Immediately
following the SPAC Contribution, OpCo contributed $<ix:nonFraction contextRef="c142" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NoncashContributionExpense" scale="0" unitRef="usd" id="ixv-31547">900,000</ix:nonFraction> to SPAC Subsidiary in exchange for <ix:nonFraction contextRef="c143" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:MinorityInterestOwnershipPercentageByParent" scale="-2" unitRef="pure" id="ixv-31548">100</ix:nonFraction>% of the outstanding common stock of
SPAC Subsidiary (the &#8220;SPAC Subsidiary Contribution&#8221;); and</span></td>
</tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.25in"/><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Immediately
following the SPAC Subsidiary Contribution, Seller sold, contributed, assigned, and conveyed to (A) OpCo, and OpCo acquired and accepted
from Seller, ninety-nine&#160;percent (<ix:nonFraction contextRef="c125" decimals="3" format="ixt:num-dot-decimal" name="hnra:OutstandingPrincipalInterestPercentage" scale="-2" unitRef="pure" id="ixv-31549">99.0</ix:nonFraction>%) of the outstanding membership interests of Pogo Resources, LLC, a Texas limited liability
company (&#8220;Pogo&#8221; or the &#8220;Target&#8221;), and (B) SPAC Subsidiary, and SPAC Subsidiary purchased and accepted from Seller,
one percent (<ix:nonFraction contextRef="c144" decimals="3" format="ixt:num-dot-decimal" name="hnra:OutstandingPrincipalInterestPercentage" scale="-2" unitRef="pure" id="ixv-31550">1.0</ix:nonFraction>%) of the outstanding membership interest of Target (together with the ninety-nine&#160;(<ix:nonFraction contextRef="c145" decimals="3" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentInterestRateEffectivePercentage" scale="-2" unitRef="pure" id="ixv-31551">99.0</ix:nonFraction>%) interest, the &#8220;Target
Interests&#8221;), in each case, in exchange for (x) $<ix:nonFraction contextRef="c143" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:Cash" scale="0" unitRef="usd" id="ixv-31552">900,000</ix:nonFraction> of the Cash Consideration (as defined below) in the case of SPAC Subsidiary
and (y) the remainder of the Aggregate Consideration (as defined below) in the case of OpCo (such transactions, together with the SPAC
Contribution and SPAC Subsidiary Contribution, the &#8220;Acquisition&#8221;).</span></td>
</tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The &#8220;Aggregate Consideration&#8221; for
the Pogo Business was (a),&#160;cash in the amount of $<ix:nonFraction contextRef="c146" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:Cash" scale="0" unitRef="usd" id="ixv-31553">31,074,127</ix:nonFraction> in immediately available funds (the &#8220;Cash Consideration&#8221;),
(b) <ix:nonFraction contextRef="c147" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CommonUnitIssued" scale="0" unitRef="shares" id="ixv-31554">2,000,000</ix:nonFraction> Class B common units of OpCo (&#8220;OpCo Class B Units&#8221;) (the &#8220;Common Unit Consideration&#8221;), which will
be equal to and exchangeable into <ix:nonFraction contextRef="c148" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CommonStockSharesIssued" scale="0" unitRef="shares" id="ixv-31555">2,000,000</ix:nonFraction>&#160;shares of Class A Common Stock issuable upon exercise of the OpCo Exchange Right (as
defined below), as reflected in the amended and restated limited liability company agreement of OpCo that became effective at Closing
(the &#8220;A&amp;R OpCo LLC Agreement&#8221;), (c) and the <ix:nonFraction contextRef="c147" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PreferredUnitsIssued" scale="0" unitRef="shares" id="ixv-31556">2,000,000</ix:nonFraction> Seller Class B Shares, (d) $<ix:nonFraction contextRef="c149" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NotesPayable" scale="0" unitRef="usd" id="ixv-31557">15,000,000</ix:nonFraction> payable through a promissory
note to Seller (the &#8220;Seller Promissory Note&#8221;), (e) <ix:nonFraction contextRef="c150" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PreferredUnitsIssued" scale="0" unitRef="shares" id="ixv-31558">1,500,000</ix:nonFraction> preferred units of OpCo (the &#8220;OpCo Preferred Units&#8221;
and together with the Opco Class A Units and the OpCo Class B Units, the &#8220;OpCo Units&#8221;) of OpCo (the &#8220;Preferred Unit
Consideration&#8221;, and, together with the Common Unit Consideration, the &#8220;Unit Consideration&#8221;), and (f) an agreement to,
on or before November 21, 2023, Buyer shall settle and pay to Seller $<ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="hnra:BusinessCombinationRecognizedIdentifiableAssetsAcquiredAndLiabilitiesAssumedSideLetterPayable" scale="0" unitRef="usd" id="ixv-31559">1,925,873</ix:nonFraction> from sales proceeds received from oil and gas production
attributable to Pogo, including pursuant to its third party contract with affiliates of Chevron. At Closing, <ix:nonFraction contextRef="c115" decimals="0" format="ixt:num-dot-decimal" name="hnra:EscrowedShareConsideration" scale="0" unitRef="usd" id="ixv-31560">500,000</ix:nonFraction> Seller Class B Shares
(the &#8220;Escrowed Share Consideration&#8221;) were placed in escrow for the benefit of Buyer pursuant to an escrow agreement and the
indemnity provisions in the MIPA. The Aggregate Consideration is subject to adjustment in accordance with the MIPA.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation><div>
</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 157; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->15<!-- Field: /Sequence --></span></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt"></p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:continuation continuedAt="_BusinessCombinationDisclosureTextBlock-c115_cont_3" id="_BusinessCombinationDisclosureTextBlock-c115_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>OpCo A&amp;R LLC Agreement </i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In connection with the Closing, the Company and
Pogo Royalty, LLC, a Texas limited liability company, an affiliate of Seller and Seller&#8217;s designated recipient of the Aggregate
Consideration (&#8220;Pogo Royalty&#8221;), entered into an amended and restated limited liability company agreement of OpCo (the &#8220;OpCo
A&amp;R LLC Agreement&#8221;). Pursuant to the A&amp;R OpCo LLC Agreement, each OpCo unitholder (excluding the Company) will, subject
to certain timing procedures and other conditions set forth therein, have the right(the &#8220;OpCo Exchange Right&#8221;) to exchange
all or a portion of its OpCo Class B Units for, at OpCo&#8217;s election,(i) shares of Class A Common Stock at an exchange ratio of one
share of Class A Common Stock for each OpCo Class B Unit exchanged, subject to conversion rate adjustments for stock splits, stock dividends
and reclassifications and other similar transactions, or (ii) an equivalent amount of cash. Additionally, the holders of OpCo Class B
Units will be required to exchange all of their OpCo Class B Units (a &#8220;Mandatory Exchange&#8221;) upon the occurrence of the following:
(i) upon the direction of the Company with the consent of at least fifty percent (<ix:nonFraction contextRef="c151" decimals="2" format="ixt:num-dot-decimal" name="hnra:UnitsPercentage" scale="-2" unitRef="pure" id="ixv-31561">50</ix:nonFraction>%) of the holders of OpCo Class B Units; or (ii) upon
the one-year anniversary of the Mandatory Conversion Trigger Date. In connection with any exchange of OpCo Class B Units pursuant to the
OpCo Exchange Right or acquisition of OpCo Class B Units pursuant to a Mandatory Exchange, a corresponding number of shares of Class B
Common Stock held by the relevant OpCo unitholder will be cancelled.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Immediately upon the Closing, Pogo Royalty exercised
the OpCo Exchange Right as it relates to <ix:nonFraction contextRef="c151" decimals="0" format="ixt:num-dot-decimal" name="hnra:ExchangeRightsShares" scale="0" unitRef="shares" id="ixv-31562">200,000</ix:nonFraction> OpCo Class B units (and <ix:nonFraction contextRef="c152" decimals="0" format="ixt:num-dot-decimal" name="hnra:ExchangeRightsShares" scale="0" unitRef="shares" id="ixv-31563">200,000</ix:nonFraction> shares of Class B Common Stock).</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The OpCo Preferred Units&#160;will be automatically
converted into OpCo Class&#160;B Units&#160;on the two-year anniversary of the issuance date of such OpCo Preferred Units&#160;(the &#8220;Mandatory
Conversion Trigger Date&#8221;) at a rate determined by dividing (i)&#160;$<ix:nonFraction contextRef="c150" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:DividendsPayableAmountPerShare" scale="0" unitRef="usdPershares" id="ixv-31564">20.00</ix:nonFraction> per unit (the &#8220;Stated Conversion Value&#8221;),
by (ii)&#160;the Market Price of the Class&#160;A Common Stock, (the &#8220;Conversion Price&#8221;). The &#8220;Market Price&#8221;
means the simple average of the daily VWAP of the Class&#160;A Common Stock during the five (5)&#160;trading days prior to the date of
conversion. On the Mandatory Conversion Trigger Date, the Company will issue a number of shares of Class&#160;B Common Stock to Seller
equivalent to the number of OpCo Class&#160;B Units&#160;issued to Seller. If not exchanged sooner, such newly issued OpCo Class&#160;B
Units&#160;shall automatically exchange into Class&#160;A Common Stock on the one-year anniversary of the Mandatory Conversion Trigger
Date at a ratio of one OpCo Class&#160;B Unit for one share of Class&#160;Common Stock. An equivalent number of shares of Class&#160;B
Common Stock must be surrendered with the OpCo Class&#160;B Units&#160;to the Company in exchange for the Class&#160;A Common Stock.
As noted above, the OpCo Class B Units must be exchanged upon the one-year anniversary of the Mandatory Conversion Trigger Date.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Option Agreement</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In connection with the Closing, HNRA Royalties,
LLC, a newly formed Delaware limited liability company and wholly-owned subsidiary of the Company (&#8220;HNRA Royalties&#8221;) and Pogo
Royalty entered into an Option Agreement (the &#8220;Option Agreement&#8221;). Pogo Royalty owns certain overriding royalty interests
in certain oil and gas assets owned by Pogo Resources, LLC (the &#8220;ORR Interest&#8221;). Pursuant to the Option Agreement, Pogo Royalty
granted irrevocable and exclusive option to HNRA Royalties to purchase the ORR Interest for the Option Price (as defined below) at any
time prior to November 15, 2024. The option is not exercisable while the Seller Promissory Note is outstanding.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The purchase price for the ORR Interest upon
exercise of the option is: (i)&#160;(1)&#160;$<ix:nonFraction contextRef="c153" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:BusinessCombinationPriceOfAcquisitionExpected" scale="0" unitRef="usd" id="ixv-31565">30,000,000</ix:nonFraction> the (&#8220;Base Option Price&#8221;), plus (2)&#160;an additional amount equal
to interest on the Base Option Price of twelve percent (<ix:nonFraction contextRef="c153" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentRedemptionPricePercentage" scale="-2" unitRef="pure" id="ixv-31566">12</ix:nonFraction>%), compounded monthly, from the Closing Date through the date of acquisition
of the ORR Interest, minus (ii)&#160;any amounts received by Pogo Royalty in respect of the ORR Interest from the month of production
in which the effective date of the Option Agreement occurs through the date of the exercise of the option (such aggregate purchase price,
the &#8220;Option Price&#8221;).</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Option Agreement and the option will immediately
terminate upon the earlier of (a)&#160;Pogo Royalty&#8217;s transfer or assignment of all of the ORR Interest in accordance with the
Option Agreement and (b)&#160;November 15, 2024. As consideration for the Option Agreement, the Company issued <ix:nonFraction contextRef="c5" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:SharesIssued" scale="0" unitRef="shares" id="ixv-31567">10,000</ix:nonFraction> shares of Class
A common stock to Pogo Royalty with a fair value of $<ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ServicingAssetAtFairValueAmount" scale="0" unitRef="usd" id="ixv-31568">67,700</ix:nonFraction>. Pogo Royalty obtained the ORR Interest effective July 1, 2023, when the
Predecessor transferred to Pogo Royalty an assigned and undivided royalty interest equal in amount to ten percent (<ix:nonFraction contextRef="c154" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentInterestRateEffectivePercentage" scale="-2" unitRef="pure" id="ixv-31569">10</ix:nonFraction>%) of the Predecessors&#8217;
interest all oil, gas and minerals in, under and produced from each lease. The Predecessor recognized a loss on sale of assets of $<ix:nonFraction contextRef="c153" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:GainLossOnSalesOfAssetsAndAssetImpairmentCharges" scale="0" unitRef="usd" id="ixv-31570">816,011</ix:nonFraction>
in connection with this transaction.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p></ix:continuation><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt"></p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><ix:continuation continuedAt="_BusinessCombinationDisclosureTextBlock-c115_cont_4" id="_BusinessCombinationDisclosureTextBlock-c115_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Backstop Agreement</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In connection with the Closing, the Company entered
a Backstop Agreement (the &#8220;Backstop Agreement&#8221;) with Pogo Royalty and certain of the Company&#8217;s founders listed therein
(the &#8220;Founders&#8221;) whereby the Pogo Royalty will have the right (&#8220;Put Right&#8221;) to cause the Founders to purchase
Seller&#8217;s OpCo Preferred Units&#160;at a purchase price per unit equal to $<ix:nonFraction contextRef="c115" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:InvestmentUnrestrictedPurchasePriceDatePerUnit" scale="0" unitRef="usdPeritem" id="ixv-31571">10.00</ix:nonFraction> per unit plus the product of (i)&#160;the number
of&#160;days elapsed since the effective date of the Backstop Agreement and (ii)&#160;$<ix:nonFraction contextRef="c1" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:DividendsPayableAmountPerShare" scale="0" unitRef="usdPershares" id="ixv-31572">10.00</ix:nonFraction> divided by 730. Seller&#8217;s right to exercise
the Put Right will survive for six (6)&#160;months following the date the Trust Shares (as defined below) are not restricted from transfer
under the Letter Agreement (as defined in the MIPA) (the &#8220;Lockup Expiration Date&#8221;).</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As security that the Founders will be able to
purchase the OpCo Preferred Units&#160;upon exercise of the Put Right, the Founders agreed to place at least <ix:nonFraction contextRef="c150" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:SharesIssued" scale="0" unitRef="shares" id="ixv-31573">1,300,000</ix:nonFraction>&#160;shares of
Class&#160;A Common Stock into escrow (the &#8220;Trust Shares&#8221;), which the Founders can sell or borrow against to meet their obligations
upon exercise of the Put Right, with the prior consent of Seller. The Company is not obligated to purchase the OpCo Preferred Units&#160;from
Pogo Royalty under the Backstop Agreement. Until the Backstop Agreement is terminated, Pogo Royalty and its affiliates are not permitted
to engage in any transaction which is designed to sell short the Class&#160;A Common Stock or any other publicly traded securities of
the Company.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Founder Pledge Agreement&#160;</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>&#160;</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In connection with the Closing, the Company entered
a Founder Pledge Agreement (the &#8220;Founder Pledge Agreement&#8221;) with the Founders whereby, in consideration of placing the Trust
Shares into escrow and entering into the Backstop Agreement, the Company agreed: (a) by January 15, 2024, to issue to the Founders an
aggregate number of newly issued shares of Class A Common Stock equal to <ix:nonFraction contextRef="c155" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:BusinessCombinationStepAcquisitionEquityInterestInAcquireePercentage" scale="-2" unitRef="pure" id="ixv-31574">10</ix:nonFraction>% of the number of Trust Shares; (b) by January 15, 2024, to
issue to the Founders number of warrants to purchase an aggregate number of shares of Class A Common Stock equal to <ix:nonFraction contextRef="c156" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:BusinessCombinationStepAcquisitionEquityInterestInAcquireePercentage" scale="-2" unitRef="pure" id="ixv-31575">10</ix:nonFraction>% of the number
of Trust Shares, which such warrants shall be exercisable for five years from issuance at an exercise price of $<ix:nonFraction contextRef="c157" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:ClassOfWarrantOrRightExercisePriceOfWarrantsOrRights1" scale="0" unitRef="usdPershares" id="ixv-31576">11.50</ix:nonFraction> per shares; (c)
if the Backstop Agreement is not terminated prior to the Lockup Expiration Date, to issue an aggregate number of newly issued shares of
Class A Common Stock equal to&#160;(i) (A) the number of Trust Shares,&#160;<i>divided by&#160;</i>(B) the simple average of the daily
VWAP of the Class A Common Stock during the five (5) Trading Days prior to the date of the termination of the Backstop Agreement, subject
to a minimum of $<ix:nonFraction contextRef="c1" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:SaleOfStockPricePerShare" scale="0" unitRef="usdPershares" id="ixv-31577">6.50</ix:nonFraction> per share,&#160;<i>multiplied by&#160;</i>(C) a price between $<ix:nonFraction contextRef="c158" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:BusinessAcquisitionSharePrice" scale="0" unitRef="usdPershares" id="ixv-31578">10.00</ix:nonFraction>-$<ix:nonFraction contextRef="c159" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:BusinessAcquisitionSharePrice" scale="0" unitRef="usdPershares" id="ixv-31579">13.00</ix:nonFraction> per share (as further described in the
Founder Pledge Agreement),&#160;<i>minus&#160;</i>(ii) the number of Trust Shares; and (d) following the purchase of&#160;OpCo Preferred
Units by a Founder pursuant to the Put Right, to issue a&#160;number of newly issued shares of Class A Common Stock equal to the number
of Trust Shares sold by such Founder.&#160;Until the Founder Pledge Agreement is terminated, the Founders are not permitted to engage
in any transaction which is designed to sell short the Class&#160;A Common Stock or any other publicly traded securities of the Company.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The above description of the Founder Pledge Agreement is a summary
only and is qualified in its entirety by the text of the Founder Pledge Agreement. In consideration for entering into the Backstop agreement,
the Company issued the Founders an aggregate of <ix:nonFraction contextRef="c115" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:StockholdersEquityOtherShares" scale="0" unitRef="shares" id="ixv-31580">134,500</ix:nonFraction> shares of Class A Common Stock, with a fair value of $<ix:nonFraction contextRef="c160" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:EquityFairValueAdjustment" scale="0" unitRef="usd" id="ixv-31581">910,565</ix:nonFraction> based on the closing
price of the Company&#8217;s common stock of $<ix:nonFraction contextRef="c161" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:SharesIssuedPricePerShare" scale="0" unitRef="usdPershares" id="ixv-31582">6.77</ix:nonFraction> on November 15, 2023.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p></ix:continuation><div>
</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 159; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->17<!-- Field: /Sequence --></span></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt"></p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:continuation id="_BusinessCombinationDisclosureTextBlock-c115_cont_4"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Acquisition was accounted for as a business
combination under ASC 805. <ix:nonNumeric contextRef="c115" continuedAt="_ScheduleOfRecognizedIdentifiedAssetsAcquiredAndLiabilitiesAssumedTableTextBlock-c115_cont_1" escape="true" name="us-gaap:ScheduleOfRecognizedIdentifiedAssetsAcquiredAndLiabilitiesAssumedTableTextBlock" id="ixv-31583">The purchase price of the Pogo Business has been allocated to the assets acquired and liabilities assumed based
on their estimated relative fair values as follows:</ix:nonNumeric></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation id="_ScheduleOfRecognizedIdentifiedAssetsAcquiredAndLiabilitiesAssumedTableTextBlock-c115_cont_1"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="font-weight: bold">Purchase Price:</td><td>&#160;</td>
    <td colspan="2" style="text-align: right">&#160;</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 88%; text-indent: -10pt; padding-left: 10pt">Cash</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right"><ix:nonFraction contextRef="c115" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PaymentsToAcquireBusinessesGross" scale="0" unitRef="usd" id="ixv-31584">31,074,127</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; text-indent: -10pt; padding-left: 10pt">Side Letter payable</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c115" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:BusinessCombinationConsiderationTransferredOther1" scale="0" unitRef="usd" id="ixv-31585">1,925,873</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-indent: -10pt; padding-left: 10pt">Purchase Price Allocation</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -10pt; padding-left: 20pt">Derivative assets</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; text-indent: -10pt; padding-left: 20pt">Accounts payable</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:BusinessCombinationRecognizedIdentifiableAssetsAcquiredAndLiabilitiesAssumedCurrentLiabilitiesAccountsPayable" scale="0" unitRef="usd" id="ixv-31601">2,290,475</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -10pt; padding-left: 20pt">Accrued liabilities and other</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:BusinessCombinationRecognizedIdentifiableAssetsAcquiredAndLiabilitiesAssumedCurrentLiabilitiesOther" scale="0" unitRef="usd" id="ixv-31602">1,244,633</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; text-indent: -10pt; padding-left: 20pt">Revenue and royalties payable</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="hnra:BusinessCombinationRecognizedIdentifiableAssetsAcquiredAndLiabilitiesAssumedRevenueAndRoyaltiesPayable" scale="0" unitRef="usd" id="ixv-31603">775,154</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -10pt; padding-left: 20pt">Revenue and royalties payable, related parties</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="hnra:BusinessCombinationRecognizedIdentifiableAssetsAcquiredAndLiabilitiesAssumedRevenueAndRoyaltiesPayableRelatedParties" scale="0" unitRef="usd" id="ixv-31604">1,199,420</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; text-indent: -10pt; padding-left: 20pt">Short-term derivative liabilities</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="hnra:BusinessCombinationRecognizedIdentifiableAssetsAcquiredAndLiabilitiesAssumedShorttermDerivativeLiabilities" scale="0" unitRef="usd" id="ixv-31605">27,569</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -10pt; padding-left: 20pt">Deferred tax liabilities</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:BusinessCombinationRecognizedIdentifiableAssetsAcquiredAndLiabilitiesAssumedDeferredTaxLiabilities" scale="0" unitRef="usd" id="ixv-31606">8,528,772</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; text-indent: -10pt; padding-left: 20pt">Asset retirement obligations, net</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="hnra:BusinessCombinationRecognizedIdentifiableAssetsAcquiredAndLiabilitiesAssumedAssetRetirementObligationsNet" scale="0" unitRef="usd" id="ixv-31607">893,235</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -10pt; padding-left: 20pt">Other liabilities</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="hnra:BusinessCombinationRecognizedIdentifiableAssetsAcquiredAndLiabilitiesAssumedOtherLiabilities" scale="0" unitRef="usd" id="ixv-31608">675,000</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:BusinessCombinationRecognizedIdentifiableAssetsAcquiredAndLiabilitiesAssumedNet" scale="0" unitRef="usd" id="ixv-31609">82,828,294</ix:nonFraction></td><td style="padding-bottom: 4pt; text-align: left">&#160;</td></tr>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The fair value of the Class A common shares is based on
the closing price of the Company&#8217;s common stock at November 15, 2023, which was $<ix:nonFraction contextRef="c162" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:SharesIssuedPricePerShare" scale="0" unitRef="usdPershares" id="ixv-31610">6.77</ix:nonFraction>. The fair value of the OpCo Class
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of the OpCo Preferred Units was estimated based on the present value of the maximum Stated Conversion Value of <ix:nonFraction contextRef="c115" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ConversionOfStockSharesIssued1" scale="0" unitRef="shares" id="ixv-31612">1,500,000</ix:nonFraction> units over the
two-year period using a weighted average cost of capital.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As of December 31, 2023, the Company owes $<ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OtherLiabilitiesCurrent" scale="0" unitRef="usd" id="ixv-31613">645,873</ix:nonFraction>
of the Side Letter payable, included in accrued expenses and other current liabilities on the consolidated balance sheet.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: -0.5pt; "><b><i>Unaudited
Pro Forma Financial Information</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: -0.5pt; "><b>&#160;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The following table sets forth the pro-forma consolidated
results of operations of the combined Successor and Predecessor companies for the year ended December 31, 2023 and 2022 as if the Acquisition
occurred on January 1, 2022. <ix:nonNumeric contextRef="c115" continuedAt="_BusinessAcquisitionProFormaInformationTextBlock-c115_cont_1" escape="true" name="us-gaap:BusinessAcquisitionProFormaInformationTextBlock" id="ixv-31614">The pro forma results of operations are presented for informational purposes only and are not indicative
of the results of operations that would have been achieved if the acquisitions had taken place on the dates noted above, or of results
that may occur in the future.</ix:nonNumeric></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<ix:continuation id="_BusinessAcquisitionProFormaInformationTextBlock-c115_cont_1"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Year ended <br/> December 31,</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2023</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2022</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 76%; text-align: justify">Revenue</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right"><ix:nonFraction contextRef="c115" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:BusinessAcquisitionsProFormaRevenue" scale="0" unitRef="usd" id="ixv-31615">25,817,805</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right"><ix:nonFraction contextRef="c23" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:BusinessAcquisitionsProFormaRevenue" scale="0" unitRef="usd" id="ixv-31616">31,409,762</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: justify">Operating income</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c115" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:BusinessAcquisitionsProFormaIncomeLossFromContinuingOperationsBeforeChangesInAccountingAndExtraordinaryItemsNetOfTax" scale="0" unitRef="usd" id="ixv-31617">3,471,094</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c23" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:BusinessAcquisitionsProFormaIncomeLossFromContinuingOperationsBeforeChangesInAccountingAndExtraordinaryItemsNetOfTax" scale="0" unitRef="usd" id="ixv-31618">8,809,272</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: justify">Net income (loss)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c115" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:BusinessAcquisitionsProFormaNetIncomeLoss" scale="0" sign="-" unitRef="usd" id="ixv-31619">164,817</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c23" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:BusinessAcquisitionsProFormaNetIncomeLoss" scale="0" unitRef="usd" id="ixv-31620">3,522,642</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: justify">Net income (loss) per common share</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">(<ix:nonFraction contextRef="c115" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:BusinessAcquisitionProFormaEarningsPerShareBasic" scale="0" sign="-" unitRef="usdPershares" id="ixv-31621">0.03</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right"><ix:nonFraction contextRef="c23" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:BusinessAcquisitionProFormaEarningsPerShareBasic" scale="0" unitRef="usdPershares" id="ixv-31622">0.67</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: justify">Weighted Average common shares outstanding</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c115" decimals="INF" format="ixt:num-dot-decimal" name="us-gaap:WeightedAverageBasicSharesOutstandingProForma" scale="0" unitRef="shares" id="ixv-31623">5,235,131</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c23" decimals="INF" format="ixt:num-dot-decimal" name="us-gaap:WeightedAverageBasicSharesOutstandingProForma" scale="0" unitRef="shares" id="ixv-31624">5,220,788</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  </table></ix:continuation></ix:continuation><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><b>&#160;</b></p><div>


</div><!-- Field: Page; Sequence: 160; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->18<!-- Field: /Sequence --></span></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt"></p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><ix:nonNumeric contextRef="c115" continuedAt="_DerivativesAndFairValueTextBlock-c115_cont_1" escape="true" name="us-gaap:DerivativesAndFairValueTextBlock" id="ixv-22540"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><b>NOTE 4 &#8212;
DERIVATIVES</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><b>&#160;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><b>Derivative Activities</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">The Company is exposed
to volatility in market prices and basis differentials for natural gas, oil and NGLs, which impacts the predictability of its cash flows
related to the sale of those commodities. These risks are managed by the Company&#8217;s use of certain derivative financial instruments.
The company has historically used crude diff swaps, fixed price swaps, and costless collars. As of December&#160;31, 2023, the Company&#8217;s
derivative financial instruments consisted of costless collars and crude diff swaps, which are described below:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><i>Costless Collars</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">Arrangements that contain
a fixed floor price (&#8220;purchased put option&#8221;) and a fixed ceiling price (&#8220;sold call option&#8221;) based on an index
price which, in aggregate, have no net cost. At the contract settlement date, (1)&#160;if the index price is higher than the ceiling
price, the Company pays the counterparty the difference between the index price and ceiling price, (2)&#160;if the index price is between
the floor and ceiling prices, no payments are due from either party, and (3)&#160;if the index price is below the floor price, the Company
will receive the difference between the floor price and the index price.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">Additionally, the Company
will occasionally purchase an additional call option at a higher strike price than the aforementioned fixed ceiling price. Often this
is accomplished in conjunction with the costless collar at no additional cost. If an additional call option is utilized, at the contract
settlement date, (1)&#160;if the index price is higher than the sold call strike price but lower than the purchased option strike price,
then the Company pays the difference between the index price and the sold call strike price, (2)&#160;if the index price is higher than
the purchased call price, then the company pays the difference between the purchased call option and the sold call option, and the company
receives payment of the difference between the index price and the purchased option strike price, (3)&#160;if the index price is between
the purchased put strike price and the sold call strike price, no payments are due from either party, (4)&#160;if the index price is
below the floor price, the Company will receive the difference between the floor price and the index price.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><ix:nonNumeric contextRef="c115" continuedAt="_ScheduleOfDerivativeInstrumentsIncludedInTradingActivitiesTextBlock-c115_cont_1" escape="true" name="us-gaap:ScheduleOfDerivativeInstrumentsIncludedInTradingActivitiesTextBlock" id="ixv-31625">The following table
sets forth the derivative volumes by period as of December&#160;31, 2023 for the Company:</ix:nonNumeric></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; ">&#160;</p>

<ix:continuation continuedAt="_ScheduleOfDerivativeInstrumentsIncludedInTradingActivitiesTextBlock-c115_cont_2" id="_ScheduleOfDerivativeInstrumentsIncludedInTradingActivitiesTextBlock-c115_cont_1"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
    <td>Q3-Q4 2024</td><td>&#160;</td>
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  </table></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; "><b>&#160;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; ">The following table sets forth the derivative
volumes by period as of December&#160;31, 2022 for the Predecessor:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; ">&#160;</p>

<ix:continuation continuedAt="_ScheduleOfDerivativeInstrumentsIncludedInTradingActivitiesTextBlock-c115_cont_3" id="_ScheduleOfDerivativeInstrumentsIncludedInTradingActivitiesTextBlock-c115_cont_2"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  </table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; ">&#160;</p></ix:continuation></ix:nonNumeric><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; "></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; ">&#160;</p><div>

</div><ix:continuation continuedAt="_DerivativesAndFairValueTextBlock-c115_cont_2" id="_DerivativesAndFairValueTextBlock-c115_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><i>Crude price differential
swaps</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">During the year ended
December 31, 2023, the Company has entered into commodity swap contracts that are effective over the next 1 to 24 months and are used
to hedge against location price risk of the respective commodity resulting from supply and demand volatility and protect cash flows against
price fluctuations. The following table reflects the weighted-average price of open commodity swap contracts as of December 31, 2023:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<ix:continuation id="_ScheduleOfDerivativeInstrumentsIncludedInTradingActivitiesTextBlock-c115_cont_3"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom">
    <td><b>&#160;</b></td><td><b>&#160;</b></td>
    <td colspan="2"><b>&#160;</b></td><td><b>&#160;</b></td><td><b>&#160;</b></td>
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  <tr style="vertical-align: bottom">
    <td><b>&#160;</b></td><td><b>&#160;</b></td>
    <td colspan="2" style="text-align: center"><b>Volume</b></td><td><b>&#160;</b></td><td><b>&#160;</b></td>
    <td colspan="2" style="text-align: center"><b>average</b></td><td><b>&#160;</b></td></tr>
  <tr style="vertical-align: bottom">
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><b>Period</b></td><td style="padding-bottom: 1.5pt"><b>&#160;</b></td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; text-align: center"><b>(Bbls/month)</b></td><td style="padding-bottom: 1.5pt"><b>&#160;</b></td><td style="padding-bottom: 1.5pt"><b>&#160;</b></td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; text-align: center"><b>price ($/Bbl)</b></td><td style="padding-bottom: 1.5pt"><b>&#160;</b></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  </table></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; "><b>Derivative Assets and Liabilities</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">As of December&#160;31,
2023 and 2022, the Company is conducting derivative activities with one counterparty, which is secured by the lender in the Company&#8217;s
bank credit facility. The Company believes the counterparty is acceptable credit risk, and the credit worthiness of the counterparty
is subject to periodic review. The assets and liabilities are netted given that all positions are held by a single counterparty and subject
to a master netting arrangement. <ix:nonNumeric contextRef="c115" continuedAt="_ScheduleOfDerivativeAssetsAtFairValueTableTextBlock-c115_cont_1" escape="true" name="us-gaap:ScheduleOfDerivativeAssetsAtFairValueTableTextBlock" id="ixv-31645">The combined fair value of derivatives included in the accompanying consolidated balance sheets as of
December&#160;31, 2023 and 2022 is summarized below.</ix:nonNumeric></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; ">&#160;</p>

<ix:continuation continuedAt="_ScheduleOfDerivativeAssetsAtFairValueTableTextBlock-c115_cont_2" id="_ScheduleOfDerivativeAssetsAtFairValueTableTextBlock-c115_cont_1"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
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    <td colspan="2">&#160;</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2">&#160;</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; ">&#160;</p>

<ix:continuation id="_ScheduleOfDerivativeAssetsAtFairValueTableTextBlock-c115_cont_2"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; "></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; ">&#160;</p><div>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; ">&#160;</p>

<ix:continuation id="_ScheduleOfDerivativesInstrumentsStatementsOfFinancialPerformanceAndFinancialPositionLocationTableTextBlock-c115_cont_1"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%">
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  <tr style="vertical-align: bottom; ">
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    <td style="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">(<ix:nonFraction contextRef="c23" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:GainLossOnSaleOfDerivatives" scale="0" sign="-" unitRef="usd" id="ixv-31666">6,978,790</ix:nonFraction></td><td style="padding-bottom: 1.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">(<ix:nonFraction contextRef="c23" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:GainLossOnDerivativeInstrumentsNetPretax" scale="0" sign="-" unitRef="usd" id="ixv-31669">4,793,790</ix:nonFraction></td><td style="padding-bottom: 4pt; font: 10pt Times New Roman, Times, Serif; text-align: left">)</td></tr>
  </table></ix:continuation></ix:continuation><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; "><b>&#160;</b></p><div>

</div><ix:nonNumeric contextRef="c115" continuedAt="_LongTermDebtTextBlock-c115_cont_1" escape="true" name="us-gaap:LongTermDebtTextBlock" id="ixv-23115"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>NOTE 5&#8239;&#8212;&#8239;LONG-TERM DEBT
AND NOTES PAYABLE</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><ix:nonNumeric contextRef="c115" continuedAt="_ScheduleOfDebtInstrumentsTextBlock-c115_cont_1" escape="true" name="us-gaap:ScheduleOfDebtInstrumentsTextBlock" id="ixv-31670">The Company&#8217;s debt instruments are as follows:</ix:nonNumeric></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation id="_ScheduleOfDebtInstrumentsTextBlock-c115_cont_1"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom">
    <td><b>&#160;</b></td><td><b>&#160;</b></td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 76%; text-align: left">Senior Secured Term Loan</td><td style="width: 1%">&#160;</td>
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-232">-</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">Less: discount</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-234">-</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="hnra:LongTermDebtCurrentDiscount" scale="0" unitRef="usd" id="ixv-31678">6,516,651</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-235">-</div></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:LongTermDebtCurrent" scale="0" unitRef="usd" id="ixv-31679">37,486,206</ix:nonFraction></td><td style="padding-bottom: 4pt; text-align: left">&#160;</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:LongTermDebtCurrent" scale="0" unitRef="usd" id="ixv-31680">26,750,000</ix:nonFraction></td><td style="padding-bottom: 4pt; text-align: left">&#160;</td></tr>
  </table></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; "><b>Senior Secured Term Loan Agreement</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In connection with the Closing, the Company (for
purposes of the Loan Agreement, the &#8220;Borrower&#8221;) and First International Bank&amp; Trust&#160;(&#8220;FIBT&#8221; or &#8220;Lender&#8221;),
OpCo, SPAC Subsidiary, Pogo, and LH Operating, LLC (for purposes of the Loan Agreement, collectively, the &#8220;Guarantors&#8221; and
together with the Borrower, the &#8220;Loan Parties&#8221;), and FIBT entered into a Senior Secured Term Loan Agreement on November 15,
2023 (the &#8220;Loan Agreement&#8221;), setting forth the terms of a senior secured term loan facility in an aggregate principal amount
of $<ix:nonFraction contextRef="c186" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentAnnualPrincipalPayment" scale="0" unitRef="usd" id="ixv-31681">28,000,000</ix:nonFraction> (the &#8220;Term Loan&#8221;).</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">Pursuant to the terms
of the Term Loan Agreement, the Term Loan was advanced in one tranche on the Closing Date. The proceeds of the Term Loan were used to
(a) fund a portion of the purchase price, (b)&#160;partially fund a debt service reserve account funded with $<ix:nonFraction contextRef="c186" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OtherLoansPayableCurrent" scale="0" unitRef="usd" id="ixv-31682">2,600,000</ix:nonFraction> at the Closing
Date, (c) pay fees and expenses in connection with the purchase and the closing of the Term Loan and (e) other general corporate purposes.
The Term Loan accrues interest at a per annum rate equal to the FIBT prime rate plus <ix:nonFraction contextRef="c186" decimals="3" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentInterestRateEffectivePercentage" scale="-2" unitRef="pure" id="ixv-31683">6.5</ix:nonFraction>% and fully matures on the third anniversary
of the Closing Date&#160;(&#8220;Maturity Date&#8221;). Payments of principal and interest will be due on the 15<sup>th</sup>&#160;day
of each calendar month, beginning December 15, 2023, each in an amount equal to the Monthly Payment Amount (as defined in the Term Loan
Agreement), except that the principal and interest payment due on the Maturity Date will be in the amount of the entire remaining principal
amount of the Term Loan and all accrued but unpaid interest then outstanding. An additional one-time payment of principal is due on the
date the annual financial report for the year ending December 31, 2024, is due to be delivered by Borrower to Lender in an amount
that Excess Cash Flow (as defined in the Term Loan Agreement) exceeds the Debt Service Coverage Ratio (as defined in the Term Loan Agreement)
of 1.35x as of the end of such quarter; provided that in no event shall the amount of the payment exceed $<ix:nonFraction contextRef="c115" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PaymentsForLoans" scale="0" unitRef="usd" id="ixv-31684">5,000,000</ix:nonFraction>.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">The Borrower may elect
to prepay all or a portion greater than $<ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OtherBorrowings" scale="0" unitRef="usd" id="ixv-31685">1,000,000</ix:nonFraction> of the amounts owed prior to the Maturity Date. In addition to the foregoing, the
Borrower is required to prepay the Term Loan with the net cash proceeds of certain dispositions and upon the decrease in value of collateral.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">On the Closing Date,
Borrower deposited $<ix:nonFraction contextRef="c187" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DepositsPaidForSecuritiesBorrowedAtCarryingValue" scale="0" unitRef="usd" id="ixv-31686">2,600,000</ix:nonFraction> into a Debt Service Reserve Account (the &#8220;Debt Service Reserve Account&#8221;) and, within 60 days
following the Closing Date, Borrower must deposit such additional amounts such that the balance of the Debt Service Reserve Account is
equal to $<ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DepositsPaidForSecuritiesBorrowedAtCarryingValue" scale="0" unitRef="usd" id="ixv-31687">5,000,000</ix:nonFraction> at all times.&#160;The Debt Service Reserve Account may be used by Lender at any time and from time to time, in Lender&#8217;s
sole discretion, to pay (or to supplement Borrower&#8217;s payments of) the obligations due under the Term Loan Agreement.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">The Term Loan Agreement
contains affirmative and restrictive covenants and representations and warranties. The Loan Parties are bound by certain affirmative
covenants setting forth actions that are required during the term of the Term Loan Agreement, including, without limitation, certain
information delivery requirements, obligations to maintain certain insurance, and certain notice requirements. Additionally, the Loan
Parties from time to time will be bound by certain restrictive covenants setting forth actions that are not permitted to be taken during
the term of the Term Loan Agreement without prior written consent, including, without limitation, incurring certain additional indebtedness,
entering into certain hedging contracts, consummating certain mergers, acquisitions or other business combination transactions, consummating
certain dispositions of assets, making certain payments on subordinated debt, making certain investments, entering into certain transactions
with affiliates, and incurring any non-permitted lien or other encumbrance on assets. The Term Loan Agreement also contains other customary
provisions, such as confidentiality obligations and indemnification rights for the benefit of the Lender. The Company was in compliance with covenants of the Term Loan Agreement as of December 31, 2023.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p></ix:nonNumeric><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p><div>

</div><ix:continuation continuedAt="_LongTermDebtTextBlock-c115_cont_2" id="_LongTermDebtTextBlock-c115_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; "><i>Pledge and Security Agreement</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">In connection with the
Term Loan, FIBT and the Loan Parties&#160;entered into a Pledge and Security Agreement on November 15, 2023 (the &#8220;Security Agreement&#8221;),
whereby the Loan Parties granted a senior security interest to FIBT on all assets of the Loan Parties, except certain excluded assets
described therein, including, among other things, any interests in the ORR Interest.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; "><i>Guaranty Agreement</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">In connection with the
Term Loan, FIBT and the Loan Parties&#160;entered into a Guaranty Agreement on November 15, 2023 (the &#8220;<span style="text-decoration:underline;text-decoration: none">Guaranty Agreement</span>&#8221;),
whereby the Guarantors guaranteed payment and performance of all Loan Parties under the Term Loan Agreement.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">The Company paid deferred
finance costs of $<ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DeferredCosts" scale="0" unitRef="usd" id="ixv-31688">1,093,318</ix:nonFraction> related to the loan, which are reflect as debt discount. For the period from November 15, 2023 to December
31, 2023, the Company amortized $<ix:nonFraction contextRef="c188" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:InterestExpenseDebt" scale="0" unitRef="usd" id="ixv-31689">56,422</ix:nonFraction> to interest expense. As of December 31, 2023, the principal balance on the Term Loan was $<span style="-sec-ix-hidden: hidden-fact-237">27,680,7063</span>,
unamortized discount was&#160;$<ix:nonFraction contextRef="c189" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentUnamortizedDiscount" scale="0" unitRef="usd" id="ixv-31690">1,036,895</ix:nonFraction> and accrued interest was $<ix:nonFraction contextRef="c190" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentIncreaseAccruedInterest" scale="0" unitRef="usd" id="ixv-31691">173,004</ix:nonFraction>.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><i>Subordination Agreement</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">In connection with the
Term Loan and the Seller Promissory Note, the Lenders, the Sellers and the Company entered into a Subordination Agreement whereby the
Sellers cannot require repayment, nor commence any action or proceeding at law or equity against the Company or the Lenders to recover
any or all of the unpaid Seller Promissory Note until the Term Loan is repaid in full.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><b>Seller Promissory
Note</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><b>&#160;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In connection with the Closing, OpCo issued the
Seller Promissory Note to Pogo Royalty in the principal amount of $<ix:nonFraction contextRef="c149" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentAnnualPrincipalPayment" scale="0" unitRef="usd" id="ixv-31692">15,000,000</ix:nonFraction>. The Seller Promissory Note matures on May 15, 2024, bears
an interest rate equal <ix:nonFraction contextRef="c149" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentInterestRateEffectivePercentage" scale="-2" unitRef="pure" id="ixv-31693">12</ix:nonFraction>% per annum, and contains no penalty for prepayment. If the Seller Promissory Note is not repaid in full on
or prior to its stated maturity date, OpCo will owe interest from and after default equal to the lesser of <ix:nonFraction contextRef="c1" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:DerivativeVariableInterestRate" scale="-2" unitRef="pure" id="ixv-31694">18</ix:nonFraction>% per annum and the highest
amount permissible under law, compounded monthly. The Seller Promissory Note is subordinated to the Term Loan as discussed above. Accrued
interest on the Seller Promissory Note was $<ix:nonFraction contextRef="c191" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentIncreaseAccruedInterest" scale="0" unitRef="usd" id="ixv-31695">277,397</ix:nonFraction> as of December 31, 2023. As a result of the Subordination Agreement, the Company
has classified the Seller Promissory Note as a long-term liability on the consolidated balance sheet.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Private Notes Payable</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Prior to December 31, 2023 the Company entered
into various unsecured promissory notes with existing investors of the Company for total principal of $<ix:nonFraction contextRef="c192" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentAnnualPrincipalPayment" scale="0" unitRef="usd" id="ixv-31696">5,434,000</ix:nonFraction> (the &#8220;Private
Notes Payable&#8221;). The Private Notes Payable bear interest at the greater of <ix:nonFraction contextRef="c192" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentInterestRateEffectivePercentage" scale="-2" unitRef="pure" id="ixv-31697">15</ix:nonFraction>% or the highest rate allowed under law, and have
a stated maturity date of the five-year anniversary of the closing of the MIPA. The investors may demand repayment beginning six months
after the closing of the MIPA. The investors also received common stock warrants equal to the principal amount funded. Each warrant entitles
the holder to purchase three quarters of one share of common stock at a price of $<ix:nonFraction contextRef="c192" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:SharePrice" scale="0" unitRef="usdPershares" id="ixv-31698">11.50</ix:nonFraction>. Each warrant will become exercisable on the
closing date of the MIPA and is exercisable through the five-year anniversary of the promissory note agreement date. The warrants also
grant the holder a one-time redemption right to require the Company pay the holder in cash equal to $<ix:nonFraction contextRef="c115" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:WarrantExercisePriceIncrease" scale="0" unitRef="usdPershares" id="ixv-31699">1</ix:nonFraction> per warrant 18 months following
the closing of the MIPA, or May 15, 2025. A total of <ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ClassOfWarrantOrRightOutstanding" scale="0" unitRef="shares" id="ixv-31700">5,434,000</ix:nonFraction> warrants were issued to these investors. Based on the redemption right
present in these warrants, the warrants are accounted for as a liability in accordance with ASC 480 and ASC 815 and a debt discount on
the Private Notes Payable, with the changes in fair value of the warrants recognize in the statement of operations.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:continuation id="_LongTermDebtTextBlock-c115_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On November 13, 2023, the Company entered into
exchange agreements (&#8220;Exchange Agreements&#8221;) with certain holders of Private Notes Payable, The Company issued <ix:nonFraction contextRef="c193" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:SharesIssued" scale="0" unitRef="shares" id="ixv-31701">451,563</ix:nonFraction> shares
of Class A common stock to certain holders of the Private Notes Payable to settle aggregate principal of $<ix:nonFraction contextRef="c193" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentAnnualPrincipalPayment" scale="0" unitRef="usd" id="ixv-31702">2,089,500</ix:nonFraction> and aggregate accrued
interest of $<ix:nonFraction contextRef="c194" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentIncreaseAccruedInterest" scale="0" unitRef="usd" id="ixv-31703">168,271</ix:nonFraction>, and recognized a loss on extinguishment of $<ix:nonFraction contextRef="c195" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ExtinguishmentOfDebtAmount" scale="0" unitRef="usd" id="ixv-31704">2,280,437</ix:nonFraction> based on the
fair value of the shares of common stock issued at the date of the Exchange Agreements.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company is amortizing the debt discount through
a period of six months from the Closing Date. The Company recognized amortization of debt discount of $<ix:nonFraction contextRef="c192" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentUnamortizedDiscount" scale="0" unitRef="usd" id="ixv-31705">1,135,131</ix:nonFraction> during the period from
November 15, 2023 to December 31, 2023. Accrued interest on the promissory notes was $<ix:nonFraction contextRef="c196" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentIncreaseAccruedInterest" scale="0" unitRef="usd" id="ixv-31706">158,801</ix:nonFraction> as of December 31, 2023.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Predecessor Revolving Credit Facility</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On June 25, 2019, the Predecessor entered into
a credit agreement (the &#8220;Credit Agreement&#8221;) with a banking institution for a revolving credit facility (the &#8220;Predecessor
Revolver&#8221;) that provided for a maximum facility amount of $<ix:nonFraction contextRef="c197" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:LineOfCreditFacilityMaximumMonthendOutstandingAmount" scale="0" unitRef="usd" id="ixv-31707">50,000,000</ix:nonFraction> and a letter of credit sublimit not to exceed ten percent
of the available borrowing base. As of December 31, 2022, the Company had $<ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OtherBorrowings" scale="0" unitRef="usd" id="ixv-31708">26,750,000</ix:nonFraction> of outstanding borrowings under the Revolver and
$<ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:LettersOfCreditOutstandingAmount" scale="0" unitRef="usd" id="ixv-31709">702,600</ix:nonFraction> of letters of credit outstanding As of November 14, 2023, the balance of the Predecessor Revolver was $<ix:nonFraction contextRef="c110" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:LettersOfCreditOutstandingAmount" scale="0" unitRef="usd" id="ixv-31710">23,750,000</ix:nonFraction>. The Predecessor
Revolver was not assumed by the Company in the MIPA, and was settled by the Sellers from its proceeds from the sale of Pogo to the Company.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Future Maturities of Long-term debt</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><ix:nonNumeric contextRef="c115" continuedAt="_ScheduleOfMaturitiesOfLongTermDebtTableTextBlock-c115_cont_1" escape="true" name="us-gaap:ScheduleOfMaturitiesOfLongTermDebtTableTextBlock" id="ixv-31711">The following summarizes the Company&#8217;s
maturities of debt instruments:</ix:nonNumeric></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation id="_ScheduleOfMaturitiesOfLongTermDebtTableTextBlock-c115_cont_1"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Principal</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>Fiscal year ended:</td><td>&#160;</td>
    <td colspan="2">&#160;</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 88%">December 31, 2024</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right"><ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:LongTermDebtMaturitiesRepaymentsOfPrincipalInNextTwelveMonths" scale="0" unitRef="usd" id="ixv-31712">7,627,102</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td>December 31, 2025</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:LongTermDebtMaturitiesRepaymentsOfPrincipalInYearTwo" scale="0" unitRef="usd" id="ixv-31713">10,558,077</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>December 31, 2026</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:LongTermDebtMaturitiesRepaymentsOfPrincipalInYearThree" scale="0" unitRef="usd" id="ixv-31714">27,965,024</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-bottom: 1.5pt">December 31, 2027</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-236">&#8212;</div></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 4pt; padding-left: 9pt">Total</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:LongTermDebt" scale="0" unitRef="usd" id="ixv-31715">46,150,203</ix:nonFraction></td><td style="padding-bottom: 4pt; text-align: left">&#160;</td></tr>
  </table></ix:continuation></ix:continuation><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:nonNumeric contextRef="c115" continuedAt="hnra_ForwardPurchaseAgrementTextBlock-c115_cont_1" escape="true" name="hnra:ForwardPurchaseAgrementTextBlock" id="ixv-23373"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><b>NOTE 6 &#8212;
FORWARD PURCHASE AGREMENT</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><b><i>&#160;</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><b><i>Forward Purchase
Agreement</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">On November 2, 2023,
the Company entered into an agreement with (i) Meteora Capital Partners, LP (&#8220;MCP&#8221;), (ii) Meteora Select Trading Opportunities
Master, LP (&#8220;MSTO&#8221;), and (iii) Meteora Strategic Capital, LLC (&#8220;MSC&#8221; and, collectively with MCP and MSTO, &#8220;FPA
Seller&#8221;) (the &#8220;Forward Purchase Agreement&#8221;) for OTC Equity Prepaid Forward Transactions. For purposes of the Forward
Purchase Agreement, the Company is referred to as the &#8220;Counterparty&#8221;. Capitalized terms used herein but not otherwise defined
shall have the meanings ascribed to such terms in the Forward Purchase Agreement.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">The Forward Purchase
Agreement provides for a prepayment shortfall in an amount in U.S. dollars equal to <ix:nonFraction contextRef="c198" decimals="4" format="ixt:num-dot-decimal" name="hnra:PercentageOfPrepaymentShortfall" scale="-2" unitRef="pure" id="ixv-31716">0.50</ix:nonFraction>% of the product of the Recycled Shares and the
Initial Price (defined below). FPA Seller in its sole discretion may sell Recycled Shares (i) at any time following November 2, 2023
(the &#8220;Trade Date&#8221;) at prices greater than the Reset Price or (ii) commencing on the 180th day following the Trade Date at
any sales price, in either case without payment by FPA Seller of any Early Termination Obligation until such time as the proceeds from
such sales equal <ix:nonFraction contextRef="c199" decimals="2" format="ixt:num-dot-decimal" name="hnra:PercentageOfPrepaymentShortfall" scale="-2" unitRef="pure" id="ixv-31717">100</ix:nonFraction>% of the Prepayment Shortfall (as set forth under the section entitled &#8220;Shortfall Sales&#8221; in the Forward
Purchase Agreement) (such sales, &#8220;Shortfall Sales,&#8221; and such Shares, &#8220;Shortfall Sale Shares&#8221;). A sale of Shares
is only (a) a &#8220;Shortfall Sale,&#8221; subject to the terms and conditions herein applicable to Shortfall Sale Shares, when a Shortfall
Sale Notice is delivered under the Forward Purchase Agreement, and (b) an Optional Early Termination, subject to the terms and conditions
of the Forward Purchase Agreement applicable to Terminated Shares, when an OET Notice is delivered under the Forward Purchase Agreement,
in each case the delivery of such notice in the sole discretion of the FPA Seller (as further described in the &#8220;Optional Early
Termination&#8221; and &#8220;Shortfall Sales&#8221; sections in the Forward Purchase Agreement).</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p></ix:nonNumeric><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "></p><div>

</div><!-- Field: Page; Sequence: 165; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->23<!-- Field: /Sequence --></span></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt"></p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p><div>

</div><ix:continuation continuedAt="hnra_ForwardPurchaseAgrementTextBlock-c115_cont_2" id="hnra_ForwardPurchaseAgrementTextBlock-c115_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">Following the Closing,
the reset price (the &#8220;Reset Price&#8221;) will be $<ix:nonFraction contextRef="c200" decimals="2" format="ixt:num-dot-decimal" name="hnra:ResetPrice" scale="0" unitRef="usdPershares" id="ixv-31718">10.00</ix:nonFraction>; provided that the Reset Price shall be reduced pursuant to a Dilutive
Offering Reset immediately upon the occurrence of such Dilutive Offering. The Purchased Amount subject to the Forward Purchase Agreement
shall be increased upon the occurrence of a Dilutive Offering Reset to that number of Shares equal to the quotient of (i) the Purchased
Amount divided by (ii) the quotient of (a) the price of such Dilutive Offering divided by (b) $<ix:nonFraction contextRef="c115" decimals="2" format="ixt:num-dot-decimal" name="hnra:DilutiveOfferingDivided" scale="0" unitRef="usdPershares" id="ixv-31719">10.00</ix:nonFraction>.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">From time to time and
on any date following the Trade Date (any such date, an &#8220;OET Date&#8221;) and subject to the terms and conditions in the Forward
Purchase Agreement, FPA Seller may, in its absolute discretion, terminate the Transaction in whole or in part by providing written notice
to Counterparty (the &#8220;OET Notice&#8221;), by the later of (a) the fifth Local Business Day following the OET Date and (b) no later
than the next Payment Date following the OET Date, (which shall specify the quantity by which the Number of Shares shall be reduced (such
quantity, the &#8220;Terminated Shares&#8221;)). The effect of an OET Notice shall be to reduce the Number of Shares by the number of
Terminated Shares specified in such OET Notice with effect as of the related OET Date. As of each OET Date, Counterparty shall be entitled
to an amount from FPA Seller, and the FPA Seller shall pay to Counterparty an amount, equal to the product of (x) the number of Terminated
Shares and (y) the Reset Price in respect of such OET Date. The payment date may be changed within a quarter at the mutual agreement
of the parties.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">The &#8220;Valuation
Date&#8221; will be the earlier to occur of (a) the date that is three (3) years after the date of the closing of the Purchase &amp;
Sale (the date of the closing of the Purchase &amp; Sale, the &#8220;Closing Date&#8221;) pursuant to the A&amp;R MIPA, (b) the date
specified by FPA Seller in a written notice to be delivered to Counterparty at FPA Seller&#8217;s discretion (which Valuation Date shall
not be earlier than the day such notice is effective) after the occurrence of any of (w) a VWAP Trigger Event, (x) a Delisting Event,
(y) a Registration Failure or (z) unless otherwise specified therein, upon any Additional Termination Event, and (c) the date specified
by FPA Seller in a written notice to be delivered to Counterparty at FPA Seller&#8217;s sole discretion (which Valuation Date shall not
be earlier than the day such notice is effective). The Valuation Date notice will become effective immediately upon its delivery from
FPA Seller to Counterparty in accordance with the Forward Share Purchase Agreement.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">On the &#8220;Cash Settlement
Payment Date,&#8221; which is the tenth Local Business Day immediately following the last day of the Valuation Period, the FPA Seller
will remit to the Counterparty an amount equal to the Settlement Amount and will not otherwise be required to return to the Counterparty
any of the Prepayment Amount and the Counterparty shall remit to the FPA Seller the Settlement Amount Adjustment; provided, that if the
Settlement Amount less the Settlement Amount Adjustment is a negative number and either clause (x) of Settlement Amount Adjustment applies
or the Counterparty has elected pursuant to clause (y) of Settlement Amount Adjustment to pay the Settlement Amount Adjustment in cash,
then neither the FPA Seller nor the Counterparty shall be liable to the other party for any payment under the Cash Settlement Payment
Date section of the Forward Purchase Agreement.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">The FPA Seller has agreed
to waive any redemption rights with respect to any Recycled Shares in connection with the Closing, as well as any redemption rights under
the Company&#8217;s certificate of incorporation that would require redemption by the Company.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Pursuant to the Forward Purchase Agreement, the
FPA Seller obtained <ix:nonFraction contextRef="c201" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:SharesIssued" scale="0" unitRef="shares" id="ixv-31720">50,070</ix:nonFraction> shares (&#8220;Recycled Shares&#8221;) and such purchase price of $<ix:nonFraction contextRef="c202" decimals="0" format="ixt:num-dot-decimal" name="hnra:PurchasePrice" scale="0" unitRef="usd" id="ixv-31721">545,356</ix:nonFraction>,&#160;or&#160;$<ix:nonFraction contextRef="c203" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:SharesIssuedPricePerShare" scale="0" unitRef="usdPershares" id="ixv-31722">10.95</ix:nonFraction>&#160;per share,&#160;was
funded by the use of the Company&#8217;s trust account proceeds as a partial prepayment (&#8220;Prepayment Amount&#8221;), and the FPA
Seller may purchase an additional <ix:nonFraction contextRef="c203" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:SharesIssued" scale="0" unitRef="shares" id="ixv-31723">504,425</ix:nonFraction> additional shares under the Forward Purchase Agreement, for the Forward Purchase Agreement redemption&#160;3&#160;years
from the date of the Acquisition (&#8220;Maturity Date&#8221;).</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">The FPA Seller received
an additional $<ix:nonFraction contextRef="c202" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OtherExpenses" scale="0" unitRef="usd" id="ixv-31724">1,004,736</ix:nonFraction> in cash from the Trust Account related to reimbursement for <ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:SharesIssued" scale="0" unitRef="shares" id="ixv-31725">90,000</ix:nonFraction> shares of Class A Common stock purchased by
the FPA Seller in connection with the transactions at the redemption price of $<ix:nonFraction contextRef="c1" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:SharesIssuedPricePerShare" scale="0" unitRef="usdPershares" id="ixv-31726">10.95</ix:nonFraction> per share and transaction fees.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">The Maturity Date may
be accelerated, at the FPA Sellers&#8217; discretion, if the Company share price trades below $<ix:nonFraction contextRef="c203" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:SharePrice" scale="0" unitRef="usdPershares" id="ixv-31727">3.00</ix:nonFraction>&#160;per share for any&#160;10&#160;trading
days during a&#160;30-day consecutive trading-day period or the Company is delisted. The Company&#8217;s common stock traded below minimum
trading price during the period from November 15, 2023 to December 31, 2023, but no acceleration of the Maturity Date has been executed
by the FPA Seller to date.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p></ix:continuation><div>
</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "></p><div>

</div><!-- Field: Page; Sequence: 166; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->24<!-- Field: /Sequence --></span></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt"></p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p><div>

</div><ix:continuation id="hnra_ForwardPurchaseAgrementTextBlock-c115_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">The fair value of the
prepayment was $<ix:nonFraction contextRef="c115" decimals="0" format="ixt:num-dot-decimal" name="hnra:FairValueOfPrepayments" scale="0" unitRef="usd" id="ixv-31728">14,257,648</ix:nonFraction> at inception of the agreement, $<ix:nonFraction contextRef="c202" decimals="0" format="ixt:num-dot-decimal" name="hnra:FairValueOfPrepayments" scale="0" unitRef="usd" id="ixv-31729">6,066,324</ix:nonFraction> as of the Closing date and was $<ix:nonFraction contextRef="c204" decimals="0" format="ixt:num-dot-decimal" name="hnra:FairValueOfPrepayments" scale="0" unitRef="usd" id="ixv-31730">6,067,094</ix:nonFraction> as of December 31, 2023,
and is included as a reduction of additional paid-in capital on the consolidated statement of stockholders&#8217; equity. The estimated
fair value of the Maturity Consideration is $<ix:nonFraction contextRef="c204" decimals="0" format="ixt:num-dot-decimal" name="hnra:FairValueOfMaturityConsideration" scale="0" unitRef="usd" id="ixv-31731">1,704,416</ix:nonFraction>. The Company recognized a gain from the change in fair value of the Forward Purchase
Agreement of $<ix:nonFraction contextRef="c131" decimals="0" format="ixt:num-dot-decimal" name="hnra:ChangeInFairValueOfForwardPurchaseAgreementLiability" scale="0" unitRef="usd" id="ixv-31732">3,268,581</ix:nonFraction> during the period from November 15, 2023 to December 31, 2023.</p></ix:continuation><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p><div>

</div><ix:nonNumeric contextRef="c115" continuedAt="_StockholdersEquityNoteDisclosureTextBlock-c115_cont_1" escape="true" name="us-gaap:StockholdersEquityNoteDisclosureTextBlock" id="ixv-23439"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><b>NOTE 7&#160;&#8212;&#160;STOCKHOLDERS&#8217;
EQUITY</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On November 15, 2023, as contemplated by the MIPA,
the Company filed the Second A&amp;R Charter with the Secretary of State of the State of Delaware, pursuant to which the number of authorized
shares of the Company&#8217;s capital stock, par value $<ix:nonFraction contextRef="c47" decimals="4" format="ixt:num-dot-decimal" name="us-gaap:CommonStockParOrStatedValuePerShare" scale="0" unitRef="usdPershares" id="ixv-31733">0.0001</ix:nonFraction> per share, was increased to <ix:nonFraction contextRef="c133" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CommonStockSharesAuthorized" scale="0" unitRef="shares" id="ixv-31734">121,000,000</ix:nonFraction> shares, consisting of (i) <ix:nonFraction contextRef="c162" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CommonStockSharesAuthorized" scale="0" unitRef="shares" id="ixv-31735">100,000,000</ix:nonFraction>
shares of Class A common stock, par value $<ix:nonFraction contextRef="c162" decimals="4" format="ixt:num-dot-decimal" name="us-gaap:CommonStockParOrStatedValuePerShare" scale="0" unitRef="usdPershares" id="ixv-31736">0.0001</ix:nonFraction> per share (the &#8220;Class A Common Stock&#8221;), (ii) <ix:nonFraction contextRef="c205" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CommonStockSharesAuthorized" scale="0" unitRef="shares" id="ixv-31737">20,000,000</ix:nonFraction> shares of Class
B common stock, par value $<ix:nonFraction contextRef="c205" decimals="4" format="ixt:num-dot-decimal" name="us-gaap:CommonStockParOrStatedValuePerShare" scale="0" unitRef="usdPershares" id="ixv-31738">0.0001</ix:nonFraction> per share (the &#8220;Class B Common Stock&#8221;), and (iii) <ix:nonFraction contextRef="c47" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PreferredStockSharesAuthorized" scale="0" unitRef="shares" id="ixv-31739">1,000,000</ix:nonFraction> shares of preferred stock, par
value $<ix:nonFraction contextRef="c47" decimals="4" format="ixt:num-dot-decimal" name="us-gaap:PreferredStockParOrStatedValuePerShare" scale="0" unitRef="usdPershares" id="ixv-31740">0.0001</ix:nonFraction> per share.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As part of the Closing on November 15, 2023, all
previously issued and outstanding shares of the Company&#8217;s common stock were converted into Class A common shares. Prior to the Closing,
there were <ix:nonFraction contextRef="c206" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CommonStockOtherSharesOutstanding" scale="0" unitRef="shares" id="ixv-31741">3,006,250</ix:nonFraction> shares of non-redeemable common stock and <ix:nonFraction contextRef="c207" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CommonStockOtherSharesOutstanding" scale="0" unitRef="shares" id="ixv-31742">4,509,403</ix:nonFraction> shares of redeemable common stock outstanding. In connection
with the Business Combination, holders of <ix:nonFraction contextRef="c133" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ExcessStockSharesOutstanding" scale="0" unitRef="shares" id="ixv-31743">3,323,707</ix:nonFraction> shares of common stock properly exercised their right to have their public shares
redeemed for a pro rata portion of the Trust Account. The holders received $<ix:nonFraction contextRef="c47" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AssetsHeldInTrust" scale="0" unitRef="usd" id="ixv-31744">36,383,179</ix:nonFraction> of cash proceeds from the Trust Account.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">As part of the consideration
to effect the Acquisition, the Company issued <ix:nonFraction contextRef="c9" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ExcessStockSharesIssued" scale="0" unitRef="shares" id="ixv-31745">2,000,000</ix:nonFraction> Class B common shares to the Sellers. Immediately upon the Closing, Pogo Royalty
exercised the OpCo Exchange Right as it relates to <ix:nonFraction contextRef="c163" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ExcessStockSharesIssued" scale="0" unitRef="shares" id="ixv-31746">200,000</ix:nonFraction> OpCo Class B units (and <ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ExcessStockSharesIssued" scale="0" unitRef="shares" id="ixv-31747">200,000</ix:nonFraction> shares of Class B Common Stock), and received
<ix:nonFraction contextRef="c5" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ExcessStockSharesIssued" scale="0" unitRef="shares" id="ixv-31748">200,000</ix:nonFraction> shares of Class A common stock.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In consideration for entering into the Backstop agreement, the Company
issues the Founders an aggregate of <ix:nonFraction contextRef="c208" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:StockholdersEquityOtherShares" scale="0" unitRef="shares" id="ixv-31749">134,500</ix:nonFraction> shares of Class A Common Stock, with a fair value of $<ix:nonFraction contextRef="c125" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:EquityFairValueAdjustment" scale="0" unitRef="usd" id="ixv-31750">910,565</ix:nonFraction> based on the closing price of
the Company&#8217;s Class A Common Stock on November 15, 2023 of $<ix:nonFraction contextRef="c162" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:SharesIssuedPricePerShare" scale="0" unitRef="usdPershares" id="ixv-31751">6.77</ix:nonFraction> per share. Also, in connection with the Closing, the Company issued
<ix:nonFraction contextRef="c209" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:SharesIssued" scale="0" unitRef="shares" id="ixv-31752">20,000</ix:nonFraction> shares of common stock with a fair value of $<ix:nonFraction contextRef="c115" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:EquityFairValueAdjustment" scale="0" unitRef="usd" id="ixv-31753">135,400</ix:nonFraction> to two consultants for due diligence costs. The stock based compensation expense
related to these issuances is included in general and administrative expenses on the Successor consolidated statement of operations. The
Company also issued <ix:nonFraction contextRef="c210" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ExcessStockSharesOutstanding" scale="0" unitRef="shares" id="ixv-31754">89,000</ix:nonFraction> shares of common stock to a company controlled by the Company&#8217;s CEO in satisfaction of $<ix:nonFraction contextRef="c211" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:EquityFairValueAdjustment" scale="0" unitRef="usd" id="ixv-31755">900,000</ix:nonFraction> of the
finder&#8217;s fee. See Note 9.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As of December 31, 2023, there were <ix:nonFraction contextRef="c7" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CommonStockSharesIssued" scale="0" unitRef="shares" id="ixv-31756">5,235,131</ix:nonFraction>
Class A common shares and <ix:nonFraction contextRef="c9" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CommonStockSharesOutstanding" scale="0" unitRef="shares" id="ixv-31757">1,800,000</ix:nonFraction> Class B common shares outstanding.&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><b>Non-Redemption Agreement</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On November 13, 2023, the Company entered into
an agreement with (i) Meteora Capital Partners, LP (&#8220;MCP&#8221;), (ii) Meteora Select Trading Opportunities Master, LP (&#8220;MSTO&#8221;),
and (iii) Meteora Strategic Capital, LLC (&#8220;MSC&#8221; and, collectively with MCP and MSTO, &#8220;Backstop Investor&#8221;) (the
&#8220;Non-Redemption Agreement&#8221;) pursuant to which Backstop Investor agreed to reverse the redemption of <ix:nonFraction contextRef="c212" decimals="0" format="ixt:num-dot-decimal" name="hnra:SharesOutstandingIncludingTemporaryEquity" scale="0" unitRef="shares" id="ixv-31758">600,000</ix:nonFraction> shares of common
stock, par value $<ix:nonFraction contextRef="c213" decimals="4" format="ixt:num-dot-decimal" name="us-gaap:TemporaryEquitySharesOutstanding" scale="0" unitRef="shares" id="ixv-31759">0.0001</ix:nonFraction> per share, of the Company (&#8220;Common Stock&#8221;). Immediately upon consummation of the closing of the transactions
contemplated by the MIPA (the &#8220;Closing&#8221;), the Company paid the Backstop Investor, in respect of the Backstop Investor Shares,
an amount in cash equal to (x) the Backstop Investor Shares, multiplied by (y) the Redemption Price (as defined in the Company&#8217;s
amended and restated certificate of incorporation) minus $<ix:nonFraction contextRef="c213" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:PreferredStockRedemptionPricePerShare" scale="0" unitRef="usdPershares" id="ixv-31760">5.00</ix:nonFraction>, or $<ix:nonFraction contextRef="c195" decimals="0" format="ixt:num-dot-decimal" name="hnra:RedemptionPrice" scale="0" unitRef="usd" id="ixv-31761">3,567,960</ix:nonFraction>. The Company paid the BackStop Investor a total of $<ix:nonFraction contextRef="c195" decimals="0" format="ixt:num-dot-decimal" name="hnra:CashProceedsForTrustAccount" scale="0" unitRef="usd" id="ixv-31762">6,017,960</ix:nonFraction>
in cash related to the Non-Redemption Agreement from proceeds of the Trust Account</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Common Stock Purchase Agreement</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On October 17, 2022, the Company entered into
a common stock purchase agreement (as amended, the &#8220;Common Stock Purchase Agreement&#8221;) and a related registration rights agreement
(the &#8220;White Lion RRA&#8221;) with White Lion Capital, LLC, a Nevada limited liability company (&#8220;White Lion&#8221;). On March
7, 2024, we entered into an Amendment No. 1 to the Common Stock Purchase Agreement.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Pursuant to the Common Stock Purchase Agreement, the
Company has the right, but not the obligation to require White Lion to purchase, from time to time, up to $<ix:nonFraction contextRef="c214" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProceedsFromIssuanceOfCommonStock" scale="0" unitRef="usd" id="ixv-31763">150,000,000</ix:nonFraction> in aggregate gross
purchase price of newly issued shares of the Company&#8217;s common stock, par value $<ix:nonFraction contextRef="c215" decimals="4" format="ixt:num-dot-decimal" name="us-gaap:CommonStockParOrStatedValuePerShare" scale="0" unitRef="usdPershares" id="ixv-31764">0.0001</ix:nonFraction> per share, subject to certain limitations
and conditions set forth in the Common Stock Purchase Agreement. Capitalized terms used but not otherwise defined herein shall have the
meaning given to such terms by the Common Stock Purchase Agreement.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:nonNumeric><div>
</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->25<!-- Field: /Sequence --></span></p></div><div>
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    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;&#160;</p><div>

</div><ix:continuation id="_StockholdersEquityNoteDisclosureTextBlock-c115_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Subject to the satisfaction of certain customary
conditions including, without limitation, the effectiveness of a registration statement registering the shares issuable pursuant to the
Common Stock Purchase Agreement, the Company&#8217;s right to sell shares to White Lion will commence on the effective date of the registration
statement and extend until December 31, 2026. During such term, subject to the terms and conditions of the Common Stock Purchase Agreement,
the Company may notify White Lion when the Company exercises its right to sell shares (the effective date of such notice, a &#8220;Notice
Date&#8221;). The number of shares sold pursuant to any such notice may not exceed (i) the lower of (a) $<ix:nonFraction contextRef="c115" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:RelatedPartiesAmountInCostOfSales" scale="0" unitRef="usd" id="ixv-31765">2,000,000</ix:nonFraction> and (b) the dollar
amount equal to the product of (1) the Effective Daily Trading Volume (2) the closing price of common stock on the Effective Date (3)
<ix:nonFraction contextRef="c216" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardPurchasePriceOfCommonStockPercent" scale="-2" unitRef="pure" id="ixv-31766">400</ix:nonFraction>% and (4) <ix:nonFraction contextRef="c216" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:EffectiveIncomeTaxRateReconciliationDeductionsDividends" scale="-2" unitRef="pure" id="ixv-31767">30</ix:nonFraction>%, divided by the closing price of common stock on NYSE American preceding the Notice Date and (ii) a number of shares
of common stock equal to the Average Daily Trading Volume multiplied by the Percentage Limit.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The purchase price to be paid by White Lion for
any such shares will equal <ix:nonFraction contextRef="c1" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:PercentageOfWeightedAverageCostInventory" scale="-2" unitRef="pure" id="ixv-31768">96</ix:nonFraction>% of the lowest daily volume-weighted average price of common stock during a period of two consecutive trading
days following the applicable Notice Date.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company will have the right to terminate
the Common Stock Purchase Agreement at any time after Commencement, at no cost or penalty, upon three trading days&#8217; prior written
notice. Additionally, White Lion will have the right to terminate the Common Stock Purchase Agreement upon three days&#8217; prior written
notice to the Company if (i) there is a Fundamental Transaction, (ii) the Company is in breach or default in any material respect of
the White Lion RRA, (iii) there is a lapse of the effectiveness, or unavailability of, the Registration Statement for a period of 45
consecutive trading days or for more than an aggregate of 90 trading days in any 365-day period, (iv) the suspension of trading of the
common stock for a period of five consecutive trading days, (v) the material breach of the Common Stock Purchase Agreement by the Company,
which breach is not cured within the applicable cure period or (vi) a Material Adverse Effect has occurred and is continuing. No termination
of the Common Stock Purchase Agreement will affect the registration rights provisions contained in the White Lion RRA.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In consideration for the commitments of White Lion, as described above,
the Company issued 138,122 shares of Class A common stock to White Lion in satisfaction of a $<ix:nonFraction contextRef="c217" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CommonStockValue" scale="0" unitRef="usd" id="ixv-31769">1,500,000</ix:nonFraction> commitment fee pursuant to the
terms of the Common stock Purchase Agreement at a price of $<ix:nonFraction contextRef="c218" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:SharesIssuedPricePerShare" scale="0" unitRef="usdPershares" id="ixv-31770">10.86</ix:nonFraction> per share, which is include in general and administrative expenses on
the consolidated statement of operations of the Successor.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Registration Rights Agreement (White Lion)</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i>&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Concurrently with the execution of the Common
Stock Purchase Agreement, the Company entered into the White Lion RRA with the White Lion in which the Company has agreed to register
the shares of common stock purchased by White Lion with the SEC for resale within 30 days of the consummation of a business combination.
The White Lion RRA also contains usual and customary damages provisions for failure to file and failure to have the registration statement
declared effective by the SEC within the time periods specified.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Common Stock Purchase Agreement and the White
Lion RRA contain customary representations, warranties, conditions and indemnification obligations of the parties. The representations,
warranties and covenants contained in such agreements were made only for purposes of such agreements and as of specific dates, were solely
for the benefit of the parties to such agreements and may be subject to limitations agreed upon by the contracting parties.</p></ix:continuation><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; "><b>&#160;</b></p><div>

</div><ix:nonNumeric contextRef="c115" continuedAt="_FairValueDisclosuresTextBlock-c115_cont_1" escape="true" name="us-gaap:FairValueDisclosuresTextBlock" id="ixv-23501"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; "><b>NOTE 8 &#8212;&#160;FAIR VALUE OF FINANCIAL INSTRUMENTS:</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The fair value of the Company&#8217;s assets
and liabilities, which qualify as financial instruments under FASB ASC&#160;820, &#8220;Fair Value Measurement&#8221;, approximates the
carrying amounts represented on the balance sheet.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;&#160;</p></ix:nonNumeric><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 168; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->26<!-- Field: /Sequence --></span></p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:continuation continuedAt="_FairValueDisclosuresTextBlock-c115_cont_2" id="_FairValueDisclosuresTextBlock-c115_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">The Fair value is defined
as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market
participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring
fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities
(Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 24px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Level 1, defined as observable
    inputs such as quoted prices (unadjusted) for identical instruments in active markets;</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 24px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Level 2, defined as inputs
    other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments
    in active markets or quoted prices for identical or similar instruments in markets that are not active; and</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 45pt; text-align: justify; text-indent: -9pt; ">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 24px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Level 3, defined as unobservable
    inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations
    derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">In some circumstances,
the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances, the
fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant
to the fair value measurement.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><b>Recurring Basis</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">Assets and liabilities
measured at fair value on a recurring basis are as follows:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><i>&#160;</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><i>Derivatives</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">The Company&#8217;s
commodity price derivatives primarily represent crude oil collar contracts (some with long calls), fixed price swap contracts and differential
swap contracts. The asset and liability measurements for the Company&#8217;s commodity price derivative contracts are determined using
Level 2 inputs. The asset and liability values attributable to the Company&#8217;s commodity price derivatives were determined based
on inputs that include, but not limited to, the contractual price of the underlying position, current market prices, crude oil forward
curves, discount rates, and volatility factors. The Company had a net derivative asset of $<ix:nonFraction contextRef="c115" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:FairValueNetDerivativeAssetLiabilityMeasuredOnRecurringBasisUnobservableInputsReconciliationTransfersOutOfLevel3" scale="0" unitRef="usd" id="ixv-31771">467,687</ix:nonFraction> as of December 31, 2023 and the Predecessor
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Forward Purchase Agreement</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The fair value upon issuance of the Forward Purchase
Agreement (both the FPA Put Option liability and Fixed Maturity Consideration) and the change in fair value from issuance to December&#160;31,
2023 is included in other expense, net in the consolidated statements of operations and comprehensive loss. The fair value of the FPA
was estimated using a Monte-Carlo Simulation in a risk-neutral framework. Specifically, the future stock price is simulated assuming
a Geometric Brownian Motion (&#8220;GBM&#8221;). For each simulated path, the forward purchase value is calculated based on the contractual
terms and then discounted back to present. Finally, the value of the forward is calculated as the average present value over all simulated
paths. The Maturity Consideration was also valued as part of this model as the timing of the payment of the Maturity Consideration may
be accelerated if the Maturity Date is accelerated. The model also considered the likelihood of a dilutive offering of common stock.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

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inputs used in calculating the fair value of the prepaid forward contract and the Maturity Consideration as of December&#160;31, 2023:</ix:nonNumeric></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation id="_FairValueAssetsAndLiabilitiesMeasuredOnRecurringAndNonrecurringBasisValuationTechniquesTableTextBlock-c115_cont_1"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="font: bold 10pt Times New Roman, Times, Serif; vertical-align: bottom">
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    <td colspan="2" style="font: bold 10pt Times New Roman, Times, Serif; border-bottom: Black 1.5pt solid; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; text-decoration: none">December&#160;31,<br/>
    2023</span></td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; text-decoration: none">&#160;</span></td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-style: italic">&#160;</td>
    <td colspan="2" style="font-style: italic; text-align: center"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b><i>Successor
                                            </i></b></p></td><td style="font-style: italic">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 88%; padding-left: 1pt">Stock price</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<ix:nonFraction contextRef="c221" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:DerivativeLiabilityMeasurementInput" scale="0" unitRef="pure" id="ixv-31774">2.03</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-left: 1pt">Term (in years)</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 1pt">Expected volatility</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-left: 1pt">Risk-free interest rate</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c224" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:DerivativeLiabilityMeasurementInput" scale="0" unitRef="pure" id="ixv-31777">3.96</ix:nonFraction></td><td style="text-align: left">%</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 1pt">Expected dividend yield</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-238">&#8212;</div></td><td style="text-align: left">%</td></tr>
  </table></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">The Company estimated
the likelihood of a Dilutive Offering at a price of $<ix:nonFraction contextRef="c202" decimals="2" format="ixt:num-dot-decimal" name="hnra:DilutiveOfferingPrice" scale="0" unitRef="usdPershares" id="ixv-31778">5.00</ix:nonFraction> per share to be <ix:nonFraction contextRef="c115" decimals="2" format="ixt:num-dot-decimal" name="hnra:ForwardPurchaseAgreementEstimateRate" scale="-2" unitRef="pure" id="ixv-31779">50</ix:nonFraction>% within nine months of December 31, 2023. The FPA estimated
fair value is considered a level 3 fair value measurement.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p></ix:continuation><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "></p><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->27<!-- Field: /Sequence --></span></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt"></p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p><div>

</div><ix:continuation id="_FairValueDisclosuresTextBlock-c115_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><i>Warrant Liability</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Based on the redemption right present in the
warrants issued in connection with promissory notes, the warrants are accounted for as a liability in accordance with ASC 480 and ASC
815, with the changes in fair value of the warrants recognize in the statement of operations.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company valued the warrants using the trading
prices of the Public Warrants, which mirror the terms of the note payable warrants. The Company also estimated the fair value of the
redemption put using a present value calculation for the time from the Closing Date of the MIPA through the 18-month redemption date
and an estimated discount rate of <ix:nonFraction contextRef="c219" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:DerivativeFixedInterestRate" scale="-2" unitRef="pure" id="ixv-31780">15</ix:nonFraction>%. The initial fair value of the warrant liabilities for warrants issued during the period was $<ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentCarryingAmount" scale="0" unitRef="usd" id="ixv-31781">4,506,312</ix:nonFraction>
and was recognized as debt discount. The estimated fair value of the warrants and redemption put was $<ix:nonFraction contextRef="c220" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:WarrantsNotSettleableInCashFairValueDisclosure" scale="0" unitRef="usd" id="ixv-31782">4,777,970</ix:nonFraction> as of December 31, 2023,
and the Company recognized a change in fair value of the warrant liability of a gain of $<ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:WarrantsNotSettleableInCashFairValueDisclosure" scale="0" unitRef="usd" id="ixv-31783">187,704</ix:nonFraction> during the period from November 15,
2023 to December 31, 2023. The warrant liability estimated fair value is considered a level 3 fair value measurement.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><b>Nonrecurring Basis</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">The carrying value of
the Company&#8217;s financial instruments, consisting of cash, accounts receivable, accounts payable and accrued expenses, approximates
their fair value due to the short maturity of such instruments. Financial instruments also consist of debt for which fair value approximates
carrying values as the debt bears interest at fixed or variable rates which are reflective of current rates otherwise available to the
Company. The Company is not exposed to significant interest, currency or credit risks arising from these financial instruments.</p></ix:continuation><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><ix:nonNumeric contextRef="c115" continuedAt="_RelatedPartyTransactionsDisclosureTextBlock-c115_cont_1" escape="true" name="us-gaap:RelatedPartyTransactionsDisclosureTextBlock" id="ixv-23654"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>NOTE 9 &#8212;&#160;RELATED PARTY TRANSACTIONS</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>&#160;</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On May 5, 2022, the Company entered into a Referral Fee and Consulting
Agreement (the &#8220;Consulting Agreement&#8221;) with Alexandria VMA Capital, LLC (&#8220;Alexandria&#8221;), an entity controlled by
Mr. Caravaggio, who became the Company&#8217;s CEO on December 17, 2023. Pursuant to the Consulting Agreement, Alexandria provided information
and contacts with suitable investments and acquisition candidates for the Company&#8217;s initial business combination. In addition, Alexandria
provided due diligence, purchasing and negotiating strategy advice, organizational and operational advice, and such other services as
requested by the Company. In consideration of the services provided by Alexandria, the Company paid to Alexander Capital a referral fee
of $<ix:nonFraction contextRef="c226" decimals="0" format="ixt:num-dot-decimal" name="hnra:UnitsPurchasedDuringPeriodShares" scale="0" unitRef="shares" id="ixv-31784">1,800,000</ix:nonFraction> equal to <ix:nonFraction contextRef="c227" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:BusinessCombinationStepAcquisitionEquityInterestInAcquireePercentage" scale="-2" unitRef="pure" id="ixv-31785">2</ix:nonFraction>% of the total value of the Company&#8217;s business combination, with half being paid by the issuance of <ix:nonFraction contextRef="c228" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CommonStockSharesIssued" scale="0" unitRef="shares" id="ixv-31786">89,000</ix:nonFraction>
shares of the Company&#8217;s Class A Common Stock. No gain was recognized on the issuance of these shares for the difference in the fair
value of the shares and the $<ix:nonFraction contextRef="c229" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:RelatedPartyTransactionPurchasesFromRelatedParty" scale="0" unitRef="usd" id="ixv-31787">900,000</ix:nonFraction> payable due to the related party nature of the transaction. The remaining $<ix:nonFraction contextRef="c226" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AccountsPayableCurrent" scale="0" unitRef="usd" id="ixv-31788">900,000</ix:nonFraction> was reflected
as accounts payable. As of December 31, 2023, the Company owes $<ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="hnra:AdvancesFromRelatedParties" scale="0" unitRef="usd" id="ixv-31789">762,000</ix:nonFraction> of the fee.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On January 20, 2023, January 27, 2023, and February
14, 2023, Mr. Caravaggio entered into Private Notes Payable with the Company. Pursuant to the Private Notes Payable, Mr. Caravaggio paid
an aggregate amount of $<ix:nonFraction contextRef="c230" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:StockIssuedDuringPeriodValueNewIssues" scale="0" unitRef="usd" id="ixv-31790">179,000</ix:nonFraction> and received promissory notes in the aggregate principal amount of $<ix:nonFraction contextRef="c231" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:InvestmentOwnedBalancePrincipalAmount" scale="0" unitRef="usd" id="ixv-31791">179,000</ix:nonFraction>, accruing interest at a rate
of <ix:nonFraction contextRef="c232" decimals="2" format="ixt:num-dot-decimal" name="hnra:AccruingInterest" scale="-2" unitRef="pure" id="ixv-31792">15</ix:nonFraction>% per annum, and common stock warrants to purchase an aggregate of <ix:nonFraction contextRef="c233" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CommonStockSharesIssued" scale="0" unitRef="shares" id="ixv-31793">179,000</ix:nonFraction> shares of Class A Common Stock of the Company at an exercise
price of $<ix:nonFraction contextRef="c234" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:WarrantExercisePriceIncrease" scale="0" unitRef="usdPershares" id="ixv-31794">11.50</ix:nonFraction> per share. The warrants issued to Mr. Caravaggio are identical to the Public Warrants that are publicly traded on the
NYSE American under the symbol &#8220;HNRAQ&#8221; in all material respects, except that the warrants were not transferable, assignable
or salable until 30 days after the Company&#8217;s initial business combination. The warrants are exercisable on the same basis as the
Public Warrants.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 1in">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On November 13, 2023, pursuant to an Exchange Agreement, the Company
agreed with Dante Caravaggio to exchange, in consideration of the surrender and forgiveness of an aggregate amount (including principal
and interest accrued thereon) of $<ix:nonFraction contextRef="c195" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:StockIssuedDuringPeriodValueNewIssues" scale="0" unitRef="usd" id="ixv-31795">100,198</ix:nonFraction> due under the Private Notes Payable, for <ix:nonFraction contextRef="c235" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CommonStockSharesIssued" scale="0" unitRef="shares" id="ixv-31796">20,040</ix:nonFraction> shares of Class A Common Stock at a price per
share equal to $<ix:nonFraction contextRef="c235" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:SharesIssuedPricePerShare" scale="0" unitRef="usdPershares" id="ixv-31797">5.00</ix:nonFraction> per share. The Company recognized a loss extinguishment of $<ix:nonFraction contextRef="c236" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ExtinguishmentOfDebtAmount" scale="0" unitRef="usd" id="ixv-31798">101,204</ix:nonFraction> in connection with this transaction.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Pursuant to the Founder Pledge Agreement, upon the Closing, the Company
issued <ix:nonFraction contextRef="c237" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CommonStockSharesIssued" scale="0" unitRef="shares" id="ixv-31799">30,000</ix:nonFraction> shares of Class A Common Stock to Dante Caravaggio, LLC, an entity controlled by Mr. Caravaggio with a fair value of $<ix:nonFraction contextRef="c115" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:RelatedPartyTransactionAmountsOfTransaction" scale="0" unitRef="usd" id="ixv-31800">203,100</ix:nonFraction>.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:nonNumeric><div>
</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 170; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->28<!-- Field: /Sequence --></span></p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:continuation id="_RelatedPartyTransactionsDisclosureTextBlock-c115_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On February 14, 2023, the Company entered into
a consulting agreement with Donald Orr, the Company&#8217;s former President, which became effective upon the closing of the MIPA for
a term of three years. Under the agreement, the Company will pay Mr. Orr&#160;an initial cash amount of $<ix:nonFraction contextRef="c238" decimals="0" format="ixt:num-dot-decimal" name="hnra:PaymentToRelatedPartyInitially" scale="0" unitRef="usd" id="ixv-31801">25,000</ix:nonFraction>, an initial award of <ix:nonFraction contextRef="c239" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CommonStockSharesIssued" scale="0" unitRef="shares" id="ixv-31802">60,000</ix:nonFraction>
shares of common stock, a monthly payment of $<ix:nonFraction contextRef="c238" decimals="0" format="ixt:num-dot-decimal" name="hnra:InitialMonthlyPayment" scale="0" unitRef="usd" id="ixv-31803">8,000</ix:nonFraction> for the first year of the agreement and $<ix:nonFraction contextRef="c238" decimals="0" format="ixt:num-dot-decimal" name="hnra:AgreementAmountPaid" scale="0" unitRef="usd" id="ixv-31804">12,000</ix:nonFraction> per month for the remaining two years,
and two grants, each consisting of restricted stock units (&#8220;RSUs&#8221;) calculated by dividing $<ix:nonFraction contextRef="c238" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:StockIssuedDuringPeriodValueRestrictedStockAwardNetOfForfeitures" scale="0" unitRef="usd" id="ixv-31805">150,000</ix:nonFraction> by the stock price on the
one year and two year anniversary of the initial Business Combination. Each of the RSU awards will vest upon the one year and two-year
anniversary of the grants. In the event of termination of Mr. Orr without cause, Mr. Orr will be entitled to 12 months of the monthly
payment in effect at that time, and the RSU awards issued to Mr. Orr shall fully vest. The <ix:nonFraction contextRef="c240" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:SaleOfStockNumberOfSharesIssuedInTransaction" scale="0" unitRef="shares" id="ixv-31806">60,000</ix:nonFraction> RSU&#8217;s were approved by the Board
and issued in March of 2024.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On February 15, 2023, the Company entered into
a consulting agreement with Rh&#244;ne Merchant House, Ltd. (&#8220;RMH Ltd&#8221;), a company control by the Company&#8217;s former
Chairman and CEO Donald H. Goree, which became effective upon the closing of the MIPA for a term of three years. Under the agreement,
the Company will pay to RMH Ltd&#160;an initial cash amount of $<ix:nonFraction contextRef="c241" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:Cash" scale="0" unitRef="usd" id="ixv-31807">50,000</ix:nonFraction>, an initial award of <ix:nonFraction contextRef="c242" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:SharesIssued" scale="0" unitRef="shares" id="ixv-31808">60,000</ix:nonFraction> shares of common stock, a monthly payment
of $<ix:nonFraction contextRef="c243" decimals="0" format="ixt:num-dot-decimal" name="hnra:MonthlyPayment" scale="0" unitRef="usd" id="ixv-31809">22,000</ix:nonFraction>, and two grants, each consisting of RSUs calculated by dividing $<ix:nonFraction contextRef="c243" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:StockIssuedDuringPeriodValueRestrictedStockAwardNetOfForfeitures" scale="0" unitRef="usd" id="ixv-31810">250,000</ix:nonFraction> by the stock price on the one year and two-year anniversary
of the initial Business Combination. Each of the RSU awards will vest upon the one year and two-year anniversary of the grants. In the
event of termination of RMH Ltd. without cause, RMH Ltd. will be entitled to $<ix:nonFraction contextRef="c244" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:SaleOfStockNumberOfSharesIssuedInTransaction" scale="0" unitRef="shares" id="ixv-31811">264,000</ix:nonFraction>, and the RSU awards issued to RMH Ltd. shall fully
vest. The <ix:nonFraction contextRef="c245" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:SaleOfStockNumberOfSharesIssuedInTransaction" scale="0" unitRef="shares" id="ixv-31812">30,000</ix:nonFraction> RSU&#8217;s were approved by the Board of Directors and issued in March of 2024. Effective May 6, 2024, the Company and
Rh&#244;ne Merchant House, Ltd. entered into a settlement and mutual release agreement pursuant to which the Company agreed to pay $<ix:nonFraction contextRef="c246" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:Cash" scale="0" unitRef="usd" id="ixv-31813">100,000</ix:nonFraction>
in cash, with $<ix:nonFraction contextRef="c247" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProceedsFromLegalSettlements" scale="0" unitRef="usd" id="ixv-31814">50,000</ix:nonFraction> paid on or before execution and the remaining $<ix:nonFraction contextRef="c247" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProceedsFromLegalSettlements" scale="0" unitRef="usd" id="ixv-31815">50,000</ix:nonFraction> by July 24, 2024 in the form of an unsecured promissory note.
The Company also agreed to issue <ix:nonFraction contextRef="c248" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CommonStockSharesIssued" scale="0" unitRef="shares" id="ixv-31816">150,000</ix:nonFraction> shares of Class A Common Stock subject to a contractual lockup as final consideration under the
Consulting Agreement, which was deemed terminated effective May 6, 2024.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>Predecessor </i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">In December of 2022,
the Predecessor entered into a related party promissory note receivable agreement with an entity controlled by owners of the Company
in an amount of $<ix:nonFraction contextRef="c249" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProceedsFromUnsecuredNotesPayable" scale="0" unitRef="usd" id="ixv-31817">4,000,000</ix:nonFraction>. The loan bore interest at a rate equal to that of the rate that the Company pays to borrow funds for its
own account plus <ix:nonFraction contextRef="c1" decimals="3" format="ixt:num-dot-decimal" name="us-gaap:InvestmentInterestRate" scale="-2" unitRef="pure" id="ixv-31818">0.5</ix:nonFraction>%. The loan was retired at the Closing Date by the Sellers.</p></ix:continuation><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><ix:nonNumeric contextRef="c115" continuedAt="_CommitmentsAndContingenciesDisclosureTextBlock-c115_cont_1" escape="true" name="us-gaap:CommitmentsAndContingenciesDisclosureTextBlock" id="ixv-23695"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>NOTE 10&#160;&#8212;&#160;COMMITMENTS AND
CONTINGENCIES</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>Registration Rights Agreement (Founder Shares)</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The holders of the Founder Shares and the Private
Placement Units&#160;and warrants that may be issued upon conversion of Private Notes Payable (and any shares of common stock issuable
upon the exercise of the Private Placement Units&#160;or warrants issued upon conversion of the working capital loans) will be entitled
to registration rights pursuant to a registration rights agreement to be signed on or before the date of the prospectus for the Initial
Public Offering. The holders of these securities are entitled to make up to three demands in the case of the founder shares, excluding
short form registration demands, and one demand in the case of the private placement warrants, the working capital loan warrants and,
in each case, the underlying shares that the Company register such securities for sale under the Securities Act. In addition, these holders
will have &#8220;piggy-back&#8221; registration rights to include their securities in other registration statements filed by the Company.
In the case of the private placement warrants, representative shares issued to EF Hutton, the demand registration rights provided will
not be exercisable for longer than five&#160;years from the effective date of the registration statement in compliance with FINRA Rule&#160;5110(f)(2)(G)(iv)&#160;and
the piggyback registration right provided will not be exercisable for longer than seven&#160;years from the effective date of the registration
statement in compliance with FINRA Rule&#160;5110(f)(2)(G)(v). The Company will bear the expenses incurred in connection with the filing
of any such registration statements.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Contingencies</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company is a party to various legal actions
arising in the ordinary course of its businesses. In accordance with ASC 450, Contingencies, the Company accrues reserves for outstanding
lawsuits, claims and proceedings when a loss contingency is probable and can be reasonably estimated. The Company estimates the amount
of loss contingencies using current available information from legal proceedings, advice from legal counsel and available insurance coverage.
Due to the inherent subjectivity of the assessments and unpredictability of the outcomes of the legal proceedings, any amounts accrued
or included in this aggregate amount may not represent the ultimate loss to the Company from the legal proceedings in question. Thus,
the Company&#8217;s exposure and ultimate losses may be higher, and possibly significantly more, than the amounts accrued.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:nonNumeric><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 171; Value: 1 --><div>
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    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:continuation id="_CommitmentsAndContingenciesDisclosureTextBlock-c115_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Environmental</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">From time to time, and in the ordinary course
of business, the Company may be subject to certain environmental liabilities. Environmental expenditures that relate to an existing condition
caused by past operations and have no future economic benefits are expensed. Environmental expenditures that extend the life of the related
property or mitigate or prevent future environmental contamination are capitalized. Liabilities for expenditures that will not qualify
for capitalization are recorded when environmental assessment and/or remediation is probable, and the costs can be reasonably estimated.
Such liabilities are undiscounted unless the timing of cash payments for the liability is fixed or reliably determinable. Environmental
liabilities normally involve estimates that are subject to revision until settlement or remediation occurs.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As of December 31, 2023 (Successor) and December
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spill at one of the Company&#8217;s producing sites in fiscal year 2017 which is recorded in other liabilities in the consolidated balance
sheets. The producing site was subsequently sold in 2019 and the Predecessor indemnified the purchaser for the remediation costs. Management
based the remediation liability on the undiscounted cost received from third- party quotes to remediate the spill. As of December 31,
2023, the Company does not believe it is likely remediation will be required in the next five years.</p></ix:continuation><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><ix:nonNumeric contextRef="c115" continuedAt="_IncomeTaxDisclosureTextBlock-c115_cont_1" escape="true" name="us-gaap:IncomeTaxDisclosureTextBlock" id="ixv-23735"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>NOTE 11 &#8212; INCOME TAXES </b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Predecessor</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Prior the closing of the Acquisition, the Predecessor
elected to be treated as a partnership for income tax purposes and was not subject to federal, state, or local income taxes. Any taxable
income or loss was recognized by the owners. Accordingly, no federal, state, or local income taxes have been reflected in the accompanying
consolidated financial statements of the Predecessor.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Successor</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

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deferred tax assets were as follows:</ix:nonNumeric></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation id="_ScheduleOfDeferredTaxAssetsAndLiabilitiesTableTextBlock-c115_cont_1"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td>Deferred tax assets</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">&#160;</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 88%; text-align: left; padding-left: 9pt">Federal net operating loss</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right"><ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DeferredTaxAssetsOperatingLossCarryforwards" scale="0" unitRef="usd" id="ixv-31822">454,225</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-left: 9pt">Transaction costs</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DeferredTaxAssetsHedgingTransactions" scale="0" unitRef="usd" id="ixv-31823">1,441,904</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 9pt">Other debt costs</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DeferredTaxAssetsTaxDeferredExpenseOther" scale="0" unitRef="usd" id="ixv-31824">885,890</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-left: 9pt">Stock-based compensation</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DeferredTaxAssetsTaxDeferredExpenseCompensationAndBenefitsShareBasedCompensationCost" scale="0" unitRef="usd" id="ixv-31825">268,405</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 1.5pt; padding-left: 9pt">Other</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DeferredTaxAssetsOther" scale="0" unitRef="usd" id="ixv-31826">3,611</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-left: 0.25in">Total deferred tax assets</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DeferredTaxAssetsGross" scale="0" unitRef="usd" id="ixv-31827">3,054,035</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Deferred tax liabilities</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-left: 9pt">Oil and natural gas properties</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OilAndGasPropertyFullCostMethodNet" scale="0" unitRef="usd" id="ixv-31828">9,097,162</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt; padding-left: 9pt">Unrealized gain on derivatives</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DeferredTaxLiabilitiesUnrealizedGainsOnTradingSecurities" scale="0" unitRef="usd" id="ixv-31829">120,013</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-bottom: 1.5pt; padding-left: 0.25in">Total deferred tax assets</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 0.25in">Net deferred tax liabilities</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DeferredIncomeTaxLiabilities" scale="0" unitRef="usd" id="ixv-31831">6,163,140</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-bottom: 1.5pt">Valuation allowance for deferred tax assets</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-239">-</div></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 4pt; padding-left: 0.25in">Net Deferred tax liability, net of allowance</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">(<ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DeferredTaxLiabilities" scale="0" unitRef="usd" id="ixv-31832">6,163,140</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">)</td></tr>
  </table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation></ix:nonNumeric><div>


</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 172; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->30<!-- Field: /Sequence --></span></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt"></p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:continuation continuedAt="_IncomeTaxDisclosureTextBlock-c115_cont_2" id="_IncomeTaxDisclosureTextBlock-c115_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><ix:nonNumeric contextRef="c115" continuedAt="_ScheduleOfComponentsOfIncomeTaxExpenseBenefitTableTextBlock-c115_cont_1" escape="true" name="us-gaap:ScheduleOfComponentsOfIncomeTaxExpenseBenefitTableTextBlock" id="ixv-31833">The income tax provision consists of the following:</ix:nonNumeric></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation id="_ScheduleOfComponentsOfIncomeTaxExpenseBenefitTableTextBlock-c115_cont_1"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td>Current income tax (benefit) expense</td><td>&#160;</td>
    <td colspan="2" style="text-align: right">&#160;</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 88%; padding-left: 9pt">Federal</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">(<ix:nonFraction contextRef="c251" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CurrentFederalTaxExpenseBenefit" scale="0" sign="-" unitRef="usd" id="ixv-31834">22,007</ix:nonFraction></td><td style="width: 1%; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-bottom: 1.5pt; padding-left: 9pt">State</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-240">-</div></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c251" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CurrentFederalStateAndLocalTaxExpenseBenefit" scale="0" sign="-" unitRef="usd" id="ixv-31835">22,007</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">Deferred tax (benefit) expense:</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 9pt">Federal</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-241">(1,467,62</div></td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 9pt">State</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c251" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DeferredStateAndLocalIncomeTaxExpenseBenefit" scale="0" sign="-" unitRef="usd" id="ixv-31836">325,795</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt; padding-left: 9pt">Valuation allowance</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction contextRef="c251" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncomeTaxReconciliationChangeInDeferredTaxAssetsValuationAllowance" scale="0" sign="-" unitRef="usd" id="ixv-31837">571,975</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-bottom: 1.5pt; padding-left: 0.25in">Total deferred income tax (benefit) expense</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  </table></ix:continuation>


<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As of December 31,<b>&#160;</b>2023, the Company
had&#160;$<ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DeferredTaxAssetsOperatingLossCarryforwardsForeign" scale="0" unitRef="usd" id="ixv-31840">1,770,098</ix:nonFraction> of estimated U.S. federal net operating loss carryovers, which do not expire, and no state net operating loss carryovers
available to offset future taxable income.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In assessing the realization of the deferred
tax assets, management considers whether it is more likely than not that some portion of all of the deferred tax assets will not be realized.
The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which
temporary differences representing net future deductible amounts become deductible. Management considers the scheduled reversal of deferred
tax liabilities, projected future taxable income and tax planning strategies in making this assessment. After consideration of all of
the information available, management believes that significant uncertainty exists with respect to future realization of the deferred
tax assets and has therefore established a full valuation allowance.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Under the Tax Cuts and Jobs Act, net operating
losses incurred after December 31, 2017 can only offset <ix:nonFraction contextRef="c250" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:EffectiveIncomeTaxRateContinuingOperations" scale="-2" unitRef="pure" id="ixv-31841">80</ix:nonFraction>% of taxable income. However, these net operating losses may be carried forward
indefinitely instead of limited to twenty years under previous tax law. Carryback of these losses is no longer permitted. The CARES Act
temporarily removed the <ix:nonFraction contextRef="c115" decimals="2" format="ixt:num-dot-decimal" name="hnra:EffectiveIncomeTaxRateReconciliationOffsetIncome" scale="-2" unitRef="pure" id="ixv-31842">80</ix:nonFraction>% of taxable income limitation to allow NOL carryforwards to fully offset income. For tax years beginning after
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taxable income for NOLs arising in tax years after 2017.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><ix:nonNumeric contextRef="c115" continuedAt="_ScheduleOfEffectiveIncomeTaxRateReconciliationTableTextBlock-c115_cont_1" escape="true" name="us-gaap:ScheduleOfEffectiveIncomeTaxRateReconciliationTableTextBlock" id="ixv-31845">A reconciliation of the federal income tax rate to the Company&#8217;s
effective tax rate is as follows:</ix:nonNumeric></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation id="_ScheduleOfEffectiveIncomeTaxRateReconciliationTableTextBlock-c115_cont_1"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 88%; text-align: left">Statutory federal income tax rate</td><td style="width: 1%">&#160;</td>
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  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c115" decimals="4" format="ixt:num-dot-decimal" name="us-gaap:EffectiveIncomeTaxRateReconciliationStateAndLocalIncomeTaxes" scale="-2" unitRef="pure" id="ixv-31847">2.86</ix:nonFraction></td><td style="text-align: left">%</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">Change in valuation allowance</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c115" decimals="4" format="ixt:num-dot-decimal" name="us-gaap:EffectiveIncomeTaxRateReconciliationChangeInDeferredTaxAssetsValuationAllowance" scale="-2" unitRef="pure" id="ixv-31849">5.02</ix:nonFraction></td><td style="text-align: left">%</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 1.5pt">Other</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-bottom: 4pt">Income tax provision</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction contextRef="c115" decimals="4" format="ixt:num-dot-decimal" name="us-gaap:EffectiveIncomeTaxRateContinuingOperations" scale="-2" unitRef="pure" id="ixv-31851">20.97</ix:nonFraction></span></td><td style="padding-bottom: 2.5pt; text-align: left">%</td></tr>
  </table></ix:continuation>


<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The effective income tax rate differs from the
U.S. statutory rate of <ix:nonFraction contextRef="c250" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:EffectiveIncomeTaxRateReconciliationAtFederalStatutoryIncomeTaxRate" scale="-2" unitRef="pure" id="ixv-31852">21</ix:nonFraction> percent primarily due to permanent differences between GAAP income and taxable income. Periods prior to November
15, 2023 are not shown because the Predecessors were treated as partnerships for U.S. federal income tax purposes and therefore do not
record a provision for U.S. federal income tax because the partners of the Predecessors report their share of the Predecessors&#8217;
income or loss on their respective income tax returns. The Predecessors are required to file tax returns on Form 1065 with the IRS. The
2021 through 2023 tax years remain open to examination.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 173; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->31<!-- Field: /Sequence --></span></p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:continuation id="_IncomeTaxDisclosureTextBlock-c115_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company files income tax returns in the U.S.
federal jurisdiction, Texas and New Mexico, and is subject to examination by the various taxing authorities. The Company&#8217;s tax
returns since inception remain open to examination by the taxing authorities. Significant differences may exist between the results of
operations reported in these consolidated financial statements and those determined for income tax purposes primarily due to the use
of different asset valuation methods for tax purposes.</p></ix:continuation><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><ix:nonNumeric contextRef="c115" escape="true" name="us-gaap:SubsequentEventsTextBlock" id="ixv-24025"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>NOTE 12 &#8212; SUBSEQUENT EVENTS </b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company evaluated subsequent events and transactions
that occurred after the balance sheet date up to the date that the consolidated financial statements were issued.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">Subsequent to December 31, 2023, the Company received an additional
$<ix:nonFraction contextRef="c115" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProceedsFromUnsecuredNotesPayable" scale="0" unitRef="usd" id="ixv-31853">350,000</ix:nonFraction>&#160;in cash proceeds under unsecured promissory notes with investors with the same terms as those disclosed in Note 5. The Company
issued an additional&#160;<ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="hnra:AdditionalNumberOfWarrantsIssued" scale="0" unitRef="shares" id="ixv-31854">350,000</ix:nonFraction>&#160;warrants with an exercise price of $<ix:nonFraction contextRef="c252" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:ClassOfWarrantOrRightExercisePriceOfWarrantsOrRights1" scale="0" unitRef="usdPershares" id="ixv-31855">11.50</ix:nonFraction>&#160;to these investors in connection with the agreements.&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On March 4, 2024, the Compensation Committee of the Board of Directors
approved awards of restricted stock units (&#8220;RSU&#8217;s&#8221;) to various employees, non-employee directors and consultants. Non-employee
directors received an aggregate of <ix:nonFraction contextRef="c253" decimals="0" format="ixt:num-dot-decimal" name="hnra:AggregateSharesReceived" scale="0" unitRef="shares" id="ixv-31856">224,500</ix:nonFraction> RSU&#8217;s, with <ix:nonFraction contextRef="c254" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsVestedNumberOfShares" scale="0" unitRef="shares" id="ixv-31857">112,000</ix:nonFraction> RSU&#8217;s vesting over <ix:nonNumeric contextRef="c253" format="ixt-sec:duryear" name="hnra:VestingPeriod" id="ixv-31858">3</ix:nonNumeric> years beginning November 15, 2024, and <ix:nonFraction contextRef="c253" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsVestedNumberOfShares" scale="0" unitRef="shares" id="ixv-31859">112,500</ix:nonFraction>
RSU&#8217;s fully vesting at November 15, 2024. Employees received a total of <ix:nonFraction contextRef="c255" decimals="0" format="ixt:num-dot-decimal" name="hnra:EmployeeSharesReceived" scale="0" unitRef="shares" id="ixv-31860">285,000</ix:nonFraction> RSU&#8217;s, including <ix:nonFraction contextRef="c256" decimals="0" format="ixt:num-dot-decimal" name="hnra:EmployeeSharesReceived" scale="0" unitRef="shares" id="ixv-31861">50,000</ix:nonFraction> RSU&#8217;s each to the Company&#8217;s
CEO, CFO and General Counsel pursuant to their employment agreements. A total of <ix:nonFraction contextRef="c253" decimals="0" format="ixt:num-dot-decimal" name="hnra:EmployeeSharesReceived" scale="0" unitRef="shares" id="ixv-31862">35,000</ix:nonFraction> RSU&#8217;s of the employee RSU&#8217;s vest immediately,
with the remainder over <ix:nonNumeric contextRef="c115" format="ixt-sec:duryear" name="hnra:VestingPeriod" id="ixv-31863">3</ix:nonNumeric> years beginning November 15, 2024. The awards also included <ix:nonFraction contextRef="c257" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardSharesPurchasedForAward" scale="0" unitRef="shares" id="ixv-31864">60,000</ix:nonFraction> RSU&#8217;s pursuant to the agreement with
RMH, Ltd., and <ix:nonFraction contextRef="c253" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardSharesPurchasedForAward" scale="0" unitRef="shares" id="ixv-31865">30,000</ix:nonFraction> RSU&#8217;s to the Company&#8217;s former President. These consultant awards vest on November 15, 2024.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">On March 7, 2024, the Company entered into an Amendment No. 1 to Common
Stock Purchase Agreement (the &#8220;Amendment&#8221;) with White Lion. Pursuant to the Amendment, the Company and White Lion agreed to
a fixed number of Commitment Shares equal to <ix:nonFraction contextRef="c258" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:SharesIssued" scale="0" unitRef="shares" id="ixv-31866">440,000</ix:nonFraction> shares of common stock to be issued to White Lion in consideration for commitments
of White Lion under the Common Stock Purchase Agreement, which the Company agreed to include all of the Commitment Shares on the Initial
Registration Statement filed by the Company. The Company has not yet issued the additional <ix:nonFraction contextRef="c258" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ExcessStockSharesIssued" scale="0" unitRef="shares" id="ixv-31867">301,878</ix:nonFraction> shares of common stock to White Lion.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">In addition, pursuant
to the Amendment, the Company may, from time to time while a Purchase Notice is active, issue a Rapid Purchase Notice to White Lion which
the parties will close on the Rapid Purchase within two Business Days of the applicable Rapid Purchase Date. Furthermore, White Lion agreed
that, on any single Business Day, it shall not publicly resell an aggregate amount of Commitment Shares in an amount that exceeds <ix:nonFraction contextRef="c115" decimals="2" format="ixt:num-dot-decimal" name="hnra:DailyTradingVolumeOfCommonStockPercentage" scale="-2" unitRef="pure" id="ixv-31868">7</ix:nonFraction>% of
the daily trading volume of the Common Stock for the preceding Business Day.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">Finally, pursuant to
the Amendment, the Company&#8217;s right&#160;<span>to sell shares of common stock to White Lion will
now extend until December 31, 2026.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><span>On
April 18, 2024, the Company and FIBT entered into a Second Amendment to Term Loan Agreement (the &#8220;Amendment&#8221;) effective as
of March 31, 2024. Pursuant to the Amendment, the Term Loan Agreement was modified to provide that the Company must, on or before December
31, 2024, deposit funds in a Debt Service Reserve Account (as defined in the Loan Agreement) such that the balance of the account equals
$<ix:nonFraction contextRef="c259" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DepositsAssets" scale="0" unitRef="usd" id="ixv-31869">5,000,000</ix:nonFraction> and FIBT waived the provision that such amount had to be deposited within 60 days of the closing date of the Loan Agreement.
In addition, the Amendment provides that, if at any time prior to December 31, 2024, the Company or any of its affiliates enter into a
sale leaseback transaction with respect to any of its equipment, the Company will deposit an amount equal to the greater of (A) $<ix:nonFraction contextRef="c259" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:Deposits" scale="0" unitRef="usd" id="ixv-31870">500,000</ix:nonFraction>
or (B) <ix:nonFraction contextRef="c259" decimals="2" format="ixt:num-dot-decimal" name="hnra:PercentageOfProceedsOfTransaction" scale="-2" unitRef="pure" id="ixv-31871">10</ix:nonFraction>% of the proceeds of such transaction into the Debt Service Reserve Account on the effective date of such sale and leaseback
transaction.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">On April 17, 2024, the
Company received a notice (the &#8220;NYSE Notice&#8221;) from the NYSE American LLC (the &#8220;NYSE American&#8221;) that the Company
is not in compliance with NYSE American listing standards as a result of its failure to timely file its Annual Report on Form 10-K for
the fiscal year ended December 31, 2023 (the &#8220;Form 10-K&#8221;) with the SEC.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The NYSE Notice had no immediate effect on the
listing of the Company&#8217;s Class A Common Stock or the Company&#8217;s public warrants on the NYSE American. The NYSE Notice informed
the Company that, under NYSE American rules, the Company has six months from April 16, 2024 to regain compliance with the NYSE American
listing standards by filing the Form 10-K with the SEC. If the Company fails to file the Form 10-K within the six-month period, the NYSE
American may grant, in its sole discretion, an extension of up to six additional months for the Company to regain compliance, depending
on the specific circumstances. The NYSE Notice also notes that the NYSE American may nevertheless commence delisting proceedings at any
time if it deems that the circumstances warrant.</p></ix:nonNumeric><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><!-- Field: Page; Sequence: 174; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->32<!-- Field: /Sequence --></span></p></div><div>
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    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><ix:nonNumeric contextRef="c115" continuedAt="_OilAndGasExplorationAndProductionIndustriesDisclosuresTextBlock-c115_cont_1" escape="true" name="us-gaap:OilAndGasExplorationAndProductionIndustriesDisclosuresTextBlock" id="ixv-24064"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; "><b>NOTE 13 &#8212; SUPPLEMENTAL
DISCLOSURE OF OIL AND NATURAL GAS OPERATIONS (UNAUDITED) </b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin: 0pt 0; ">The Company has only
<ix:nonFraction contextRef="c115" decimals="0" format="ixt-sec:numwordsen" name="us-gaap:NumberOfReportableSegments" scale="0" unitRef="pure" id="ixv-31872">one</ix:nonFraction> reportable operating segment, which is oil and natural gas development, exploration, and production in the United&#160;States. See
the Company&#8217;s accompanying consolidated statements of operations for information about results of operations for oil and gas producing
activities.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><b>Capitalized Costs
Related to Crude Oil and Natural Gas Producing Activities</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; ">&#160;</p>

<ix:continuation id="_CapitalizedCostsRelatingToOilAndGasProducingActivitiesDisclosureTextBlock-c115_cont_1"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
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    <td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
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    <td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: #CCEEFF">
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    <td>&#160;</td>
    <td style="border-bottom: black 4.5pt double"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</span></td>
    <td style="border-bottom: black 4.5pt double; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CapitalizedCostsOilAndGasProducingActivitiesNet" scale="0" unitRef="usd" id="ixv-31878">93,837,245</ix:nonFraction></span></td>
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    <td>&#160;</td></tr>
  </table></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; "><b>&#160;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; "><b>Costs Incurred for Oil and Natural Gas
Producing Activities</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; "><ix:nonNumeric contextRef="c115" continuedAt="_CostIncurredInOilAndGasPropertyAcquisitionExplorationAndDevelopmentActivitiesDisclosureTextBlock-c115_cont_1" escape="true" name="us-gaap:CostIncurredInOilAndGasPropertyAcquisitionExplorationAndDevelopmentActivitiesDisclosureTextBlock" id="ixv-31880">Costs incurred in crude oil and natural gas
exploration and development for the periods presented:</ix:nonNumeric>&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; ">&#160;</p>

<ix:continuation id="_CostIncurredInOilAndGasPropertyAcquisitionExplorationAndDevelopmentActivitiesDisclosureTextBlock-c115_cont_1"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Successor</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="border-left: Black 1.5pt solid; font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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    December&#160;31,<br/>
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    2023&#160;to<br/>
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    year&#160;ended<br/>
    December&#160;31,<br/>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right"><div style="-sec-ix-hidden: hidden-fact-242">-</div></td><td style="width: 1%; text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid; width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right"><div style="-sec-ix-hidden: hidden-fact-243">-</div></td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right"><ix:nonFraction contextRef="c23" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CostsIncurredExplorationCosts" scale="0" unitRef="usd" id="ixv-31881">1,031,300</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c21" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CostsIncurredDevelopmentCosts" scale="0" unitRef="usd" id="ixv-31882">238,499</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid; padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c22" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CostsIncurredDevelopmentCosts" scale="0" unitRef="usd" id="ixv-31883">6,769,557</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 4pt">Total</td><td style="padding-bottom: 4pt">&#160;</td>
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    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c22" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CostsIncurredOilAndGasPropertyAcquisitionExplorationAndDevelopmentActivities" scale="0" unitRef="usd" id="ixv-31886">6,769,557</ix:nonFraction></td><td style="padding-bottom: 4pt; text-align: left">&#160;</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c23" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CostsIncurredOilAndGasPropertyAcquisitionExplorationAndDevelopmentActivities" scale="0" unitRef="usd" id="ixv-31887">16,079,400</ix:nonFraction></td><td style="padding-bottom: 4pt; text-align: left">&#160;</td></tr>
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</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; "></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; "><b>&#160;</b></p><div>

</div><ix:continuation continuedAt="_OilAndGasExplorationAndProductionIndustriesDisclosuresTextBlock-c115_cont_2" id="_OilAndGasExplorationAndProductionIndustriesDisclosuresTextBlock-c115_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><b>Reserve Quantity
Information</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">The following information
represents estimates of the Company&#8217;s proved reserves as of December&#160;31, 2023 and 2022, which have been prepared by an independent
third party and they are presented in accordance with SEC rules. These rules require SEC reporting companies to prepare their reserve
estimates using specified reserve definitions and pricing based on a 12-month unweighted average of the first-day-of-the-month pricing.
The pricing that was used for estimates of the Company&#8217;s reserves as of December&#160;31, 2023 and 2022 was based on an unweighted
average 12-month average U.S.&#160;Energy Information Administration WTI posted price per Bbl for oil and Henry Hub prices for natural
gas price per Mcf for natural gas, adjusted for transportation, quality and basis differentials.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">Subject to limited exceptions,
proved undeveloped reserves may only be booked if they relate to wells scheduled to be drilled within five&#160;years of the date of
booking. This requirement has limited and may continue to limit, the Company&#8217;s potential to record additional proved undeveloped
reserves as it pursues its drilling program. Moreover, the Company may be required to write down its proved undeveloped reserves if it
does not drill on those reserves within the required five-year timeframe. The Company does not have any proved undeveloped reserves which
have remained undeveloped for five&#160;years or more. The Company&#8217;s proved oil and natural gas reserves are located in the United&#160;States
in the Permian Basin of southeast New Mexico. Proved reserves were estimated in accordance with the guidelines established by the SEC
and the FASB.&#160;Oil and natural gas reserve quantity estimates are subject to numerous uncertainties inherent in the estimation of
quantities of proved reserves and in the projection of future rates of production and the timing of development expenditures. The accuracy
of such estimates is a function of the quality of available data and of engineering and geological interpretation and judgment. Results
of subsequent drilling, testing and production may cause either upward or downward revision of previous estimates. Further, the volumes
considered to be commercially recoverable fluctuate with changes in prices and operating costs. The Company emphasizes that reserve estimates
are inherently imprecise and that estimates of new discoveries are more imprecise than those of currently producing oil and natural gas
properties. Accordingly, these estimates are expected to change as additional information becomes available in the future.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><ix:nonNumeric contextRef="c115" continuedAt="_ScheduleOfProvedDevelopedAndUndevelopedOilAndGasReserveQuantitiesTextBlock-c115_cont_1" escape="true" name="srt:ScheduleOfProvedDevelopedAndUndevelopedOilAndGasReserveQuantitiesTextBlock" id="ixv-31888">The following table
and subsequent narrative disclosure provides a roll forward of the total proved reserves for the&#160;years ended December&#160;31, 2023
and 2022 as well as proved developed and proved undeveloped reserves at the beginning and end of each respective year:</ix:nonNumeric></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<ix:continuation id="_ScheduleOfProvedDevelopedAndUndevelopedOilAndGasReserveQuantitiesTextBlock-c115_cont_1"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  </table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p></ix:continuation></ix:continuation><div>


</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "></p><div>

</div><!-- Field: Page; Sequence: 176; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->34<!-- Field: /Sequence --></span></p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><i>&#160;</i></p><div>

</div><ix:continuation continuedAt="_OilAndGasExplorationAndProductionIndustriesDisclosuresTextBlock-c115_cont_3" id="_OilAndGasExplorationAndProductionIndustriesDisclosuresTextBlock-c115_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Extensions and discoveries.&#160;</i>For the
year ended December&#160;31, 2023 and 2022, extensions and discoveries contributed to the increase of <ix:nonFraction contextRef="c260" decimals="0" format="ixt:num-dot-decimal" name="srt:ProvedDevelopedAndUndevelopedReserveExtensionAndDiscoveryEnergy" scale="0" unitRef="mboe" id="ixv-31943">1,901</ix:nonFraction> MBoe and <ix:nonFraction contextRef="c261" decimals="0" format="ixt:num-dot-decimal" name="srt:ProvedDevelopedAndUndevelopedReserveExtensionAndDiscoveryEnergy" scale="0" unitRef="mboe" id="ixv-31944">0</ix:nonFraction> MBoe, respectively,
in the Company&#8217;s proved reserves. The increase of extensions and discoveries in 2023 is due to the Company&#8217;s development of
the Seven Rivers waterflood.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">

</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><i>&#160;</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><i>Dispositions: </i>For
the year ended December 31, 2023, dispositions represent the removal of reserves attributed to the sale of an undivided royalty interest
equal in amount to ten percent (<ix:nonFraction contextRef="c115" decimals="2" format="ixt:num-dot-decimal" name="hnra:UndividedRoyaltyInterest" scale="-2" unitRef="pure" id="ixv-31945">10</ix:nonFraction>%) by the Predecessor to Pogo Royalty of the Predecessor&#8217;s all oil, gas and minerals in, under
and produced from each lease.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><i>&#160;</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><i>Revisions of previous
estimates.&#160;</i>For the year ended December&#160;31, 2023, revisions of previous estimates resulted in the decrease of reserves with
a negative revision of <ix:nonFraction contextRef="c115" decimals="0" format="ixt:num-dot-decimal" name="srt:ProvedDevelopedAndUndevelopedReserveRevisionOfPreviousEstimateEnergy" scale="0" sign="-" unitRef="mboe" id="ixv-31946">1,995</ix:nonFraction> MBoe in the Company&#8217;s proved reserves. The negative revision in 2023 is primarily attributable to
the decrease in year-end SEC commodity prices for oil and natural gas.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><b>&#160;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">For the year ended December&#160;31,
2022, revisions of previous estimates partially offset the decrease in reserves with a positive revision of <ix:nonFraction contextRef="c23" decimals="0" format="ixt:num-dot-decimal" name="srt:ProvedDevelopedAndUndevelopedReserveRevisionOfPreviousEstimateEnergy" scale="0" unitRef="mboe" id="ixv-31947">325</ix:nonFraction> MBoe in the Company&#8217;s
proved reserves. The positive revision in 2022 is primarily attributable to the increase in year-end SEC commodity prices for oil and
natural gas.<b>&#160;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><b>&#160;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><b>Standardized Measure
of Discounted Future Net Cash Flows</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">The standardized measure
of discounted future net cash flows does not purport to be, nor should it be interpreted to present, the fair value of the oil and natural
gas reserves of a property. An estimate of fair value would take into account, among other things, the recovery of reserves not presently
classified as proved, the value of unproved properties and consideration of expected future economic and operating conditions.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">The estimates of future
cash flows and future production and development costs as of December&#160;31, 2023 and 2022 are based on the unweighted arithmetic average
first-day-of-the-month price for the preceding 12-month period. Estimated future production of proved reserves and estimated future production
and development costs of proved reserves are based on current costs and economic conditions. All wellhead prices are held flat over the
forecast period for all reserve categories. The estimated future net cash flows are then discounted at a rate of <ix:nonFraction contextRef="c115" decimals="2" format="ixt:num-dot-decimal" name="hnra:FutureNetCashFlowsDiscountedRate" scale="-2" unitRef="pure" id="ixv-31948">10</ix:nonFraction>%.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><ix:nonNumeric contextRef="c115" continuedAt="_StandardizedMeasureOfDiscountedFutureCashFlowsRelatingToProvedReservesDisclosureTextBlock-c115_cont_1" escape="true" name="srt:StandardizedMeasureOfDiscountedFutureCashFlowsRelatingToProvedReservesDisclosureTextBlock" id="ixv-31949">The standardized measure
of discounted future net cash flows relating to proved oil and natural gas reserves is as follows:</ix:nonNumeric></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; ">&#160;</p>

<ix:continuation id="_StandardizedMeasureOfDiscountedFutureCashFlowsRelatingToProvedReservesDisclosureTextBlock-c115_cont_1"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2023</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-style: italic">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c295" decimals="-3" format="ixt:num-dot-decimal" name="srt:FutureNetCashFlowsRelatingToProvedOilAndGasReservesProductionCosts" scale="3" unitRef="usd" id="ixv-31952">438,653</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -10pt; padding-left: 10pt">Future development costs</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction contextRef="c295" decimals="-3" format="ixt:num-dot-decimal" name="srt:FutureNetCashFlowsRelatingToProvedOilAndGasReservesDevelopmentCosts" scale="3" unitRef="usd" id="ixv-31954">94,156</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -10pt; padding-left: 10pt"><ix:nonFraction contextRef="c297" decimals="2" format="ixt:num-dot-decimal" name="hnra:FutureNetCashFlowsRelatingToProvedOilAndGasReservesAnnualDiscount" scale="-2" unitRef="pure" id="ixv-31958"><ix:nonFraction contextRef="c298" decimals="2" format="ixt:num-dot-decimal" name="hnra:FutureNetCashFlowsRelatingToProvedOilAndGasReservesAnnualDiscount" scale="-2" unitRef="pure" id="ixv-31959">10</ix:nonFraction></ix:nonFraction>% annual discount for estimated timing of cash flows</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction contextRef="c295" decimals="-3" format="ixt:num-dot-decimal" name="srt:FutureNetCashFlowsRelatingToProvedOilAndGasReservesTenPercentAnnualDiscountForEstimatedTimingOfCashFlows" scale="3" unitRef="usd" id="ixv-31960">403,413</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction contextRef="c296" decimals="-3" format="ixt:num-dot-decimal" name="srt:FutureNetCashFlowsRelatingToProvedOilAndGasReservesTenPercentAnnualDiscountForEstimatedTimingOfCashFlows" scale="3" unitRef="usd" id="ixv-31961">585,596</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-bottom: 4pt; text-indent: -10pt; padding-left: 10pt">Standardized measure of discounted future net cash flows</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c295" decimals="-3" format="ixt:num-dot-decimal" name="srt:StandardizedMeasureOfDiscountedFutureNetCashFlowsRelatingToProvedOilAndGasReserves" scale="3" unitRef="usd" id="ixv-31962">280,618</ix:nonFraction></td><td style="padding-bottom: 4pt; text-align: left">&#160;</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c296" decimals="-3" format="ixt:num-dot-decimal" name="srt:StandardizedMeasureOfDiscountedFutureNetCashFlowsRelatingToProvedOilAndGasReserves" scale="3" unitRef="usd" id="ixv-31963">519,547</ix:nonFraction></td><td style="padding-bottom: 4pt; text-align: left">&#160;</td></tr>
  </table></ix:continuation>


<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">In the foregoing determination
of future cash inflows, sales prices used for oil and natural gas for December&#160;31, 2023 and 2022 were estimated using the average
price during the 12-month period, determined as the unweighted arithmetic average of the first-day-of-the-month price for each month.
Prices were adjusted by lease for quality, transportation fees and regional price differentials. Future costs of developing and producing
the proved gas and oil reserves reported at the end of each year shown were based on costs determined at each such year-end, assuming
the continuation of existing economic conditions. Furthermore, future development costs include abandonment costs.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p></ix:continuation><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "></p><div>

</div><!-- Field: Page; Sequence: 177; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->35<!-- Field: /Sequence --></span></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt"></p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p><div>

</div><ix:continuation id="_OilAndGasExplorationAndProductionIndustriesDisclosuresTextBlock-c115_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">It is not intended that
the FASB&#8217;s standardized measure of discounted future net cash flows represent the fair market value of the Company&#8217;s proved
reserves. The Company cautions that the disclosures shown are based on estimates of proved reserve quantities and future production schedules
which are inherently imprecise and subject to revision and the <ix:nonFraction contextRef="c115" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:MalpracticeLossContingencyDiscountRate" scale="-2" unitRef="pure" id="ixv-31964">10</ix:nonFraction>% discount rate is arbitrary. In addition, costs and prices as of the
measurement date are used in the determinations and no value may be assigned to probable or possible reserves.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><b>&#160;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><ix:nonNumeric contextRef="c115" continuedAt="_ScheduleOfChangesInStandardizedMeasureOfDiscountedFutureNetCashFlowsTableTextBlock-c115_cont_1" escape="true" name="srt:ScheduleOfChangesInStandardizedMeasureOfDiscountedFutureNetCashFlowsTableTextBlock" id="ixv-31965">Changes in the standardized
measure of discounted future net cash flows relating to proved oil and natural gas reserves are as follows:</ix:nonNumeric></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<ix:continuation id="_ScheduleOfChangesInStandardizedMeasureOfDiscountedFutureNetCashFlowsTableTextBlock-c115_cont_1"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2022</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 76%; text-indent: -10pt; padding-left: 10pt">Balance, beginning of period (Predecessor)</td><td style="width: 1%">&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; text-indent: -10pt; padding-left: 10pt">Net change in sales and transfer prices and in production (lifting) costs related to future production</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c115" decimals="-3" format="ixt:num-dot-decimal" name="srt:NetIncreaseDecreaseInSalesAndTransferPricesAndProductionCosts" scale="3" sign="-" unitRef="usd" id="ixv-31968">95,981</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -10pt; padding-left: 10pt">Timing and other differences</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 4pt; text-indent: -10pt; padding-left: 10pt">Standardized measure of discounted future net cash flows (Successor for 2023, Predecessor for 2022)</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c1" decimals="-3" format="ixt:num-dot-decimal" name="srt:StandardizedMeasureOfDiscountedFutureNetCashFlowsRelatingToProvedOilAndGasReserves" scale="3" unitRef="usd" id="ixv-31983">280,618</ix:nonFraction></td><td style="padding-bottom: 4pt; text-align: left">&#160;</td><td style="padding-bottom: 4pt">&#160;</td>
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  </table></ix:continuation></ix:continuation><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; ">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><!-- Field: Page; Sequence: 178; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->36<!-- Field: /Sequence --></span></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt"></p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><div><a id="a_003"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>EON RESOURCES INC.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>F/K/A HNR ACQUISITION CORP</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>CONDENSED CONSOLIDATED BALANCE SHEETS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">September&#160;30,<br/> 2024</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">December&#160;31,<br/> 2023</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">(Unaudited)</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">&#160;</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="font-weight: bold">ASSETS</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">&#160;</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">&#160;</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 76%; text-indent: -9pt; padding-left: 0.25in">Cash</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right"><ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents" scale="0" unitRef="usd" id="ixv-31985">2,746,896</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right"><ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents" scale="0" unitRef="usd" id="ixv-31986">3,505,454</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; text-indent: -9pt; padding-left: 0.25in">Accounts receivable</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-27">&#160;</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-28">&#160;</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -9pt; padding-left: 27pt">Crude oil and natural gas</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CrudeOilAndNaturalGasLiquids" scale="0" unitRef="usd" id="ixv-31987">2,059,863</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td style="text-indent: -9pt; padding-left: 27pt">Other</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OtherAssetsCurrent" scale="0" unitRef="usd" id="ixv-31989">1,301</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OtherAssetsCurrent" scale="0" unitRef="usd" id="ixv-31990">90,163</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -9pt; padding-left: 0.25in">Short-term derivative instrument asset</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DerivativeAssetsCurrent" scale="0" unitRef="usd" id="ixv-31991">628,513</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DerivativeAssetsCurrent" scale="0" unitRef="usd" id="ixv-31992">391,488</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -9pt; padding-left: 0.25in">Prepaid expenses and other current assets</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PrepaidExpenseAndOtherAssetsCurrent" scale="0" unitRef="usd" id="ixv-31993">544,209</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PrepaidExpenseAndOtherAssetsCurrent" scale="0" unitRef="usd" id="ixv-31994">722,002</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: left; text-indent: -9pt; padding-left: 9pt">Total current assets</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; text-indent: -9pt; padding-left: 9pt">Crude oil and natural gas properties, successful efforts method:</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -9pt; padding-left: 0.25in">Proved properties</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProvedOilAndGasPropertySuccessfulEffortMethod" scale="0" unitRef="usd" id="ixv-31997">98,870,589</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProvedOilAndGasPropertySuccessfulEffortMethod" scale="0" unitRef="usd" id="ixv-31998">94,189,372</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -9pt; padding-left: 0.25in">Accumulated depreciation, depletion, amortization and impairment</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OilAndGasPropertySuccessfulEffortMethodAccumulatedDepreciationDepletionAmortizationAndImpairment" scale="0" unitRef="usd" id="ixv-31999">1,858,369</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OilAndGasPropertySuccessfulEffortMethodAccumulatedDepreciationDepletionAmortizationAndImpairment" scale="0" unitRef="usd" id="ixv-32000">352,127</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -9pt; padding-left: 27pt">Total oil and natural gas properties, net</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OilAndGasPropertySuccessfulEffortMethodNet" scale="0" unitRef="usd" id="ixv-32002">93,837,245</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-29">-</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -9pt; padding-left: 0.25in">Long-term derivative instrument asset</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -9pt; padding-left: 9pt">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AccruedRoyaltiesCurrentAndNoncurrent" scale="0" unitRef="usd" id="ixv-32014">247,572</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AccruedRoyaltiesCurrentAndNoncurrent" scale="0" unitRef="usd" id="ixv-32015">1,523,138</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; text-indent: -9pt; padding-left: 0.25in">Deferred underwriting fee payable</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DeferredCompensationLiabilityCurrent" scale="0" unitRef="usd" id="ixv-32016">1,140,000</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DeferredCompensationLiabilityCurrent" scale="0" unitRef="usd" id="ixv-32017">1,300,000</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c12" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NotesPayableCurrent" scale="0" unitRef="usd" id="ixv-32018">3,827,976</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c3" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NotesPayableCurrent" scale="0" unitRef="usd" id="ixv-32019">2,359,048</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; text-indent: -9pt; padding-left: 0.25in">Warrant liability, current portion</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="hnra:WarrantLiabilityCurrent" scale="0" unitRef="usd" id="ixv-32020">5,672,604</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-30">-</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -9pt; padding-left: 0.25in">Current portion of long-term debt</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OtherLongTermDebtCurrent" scale="0" unitRef="usd" id="ixv-32021">10,914,900</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OtherLongTermDebtCurrent" scale="0" unitRef="usd" id="ixv-32022">4,157,602</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -9pt; padding-left: 0.25in">Forward purchase agreement liability</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="hnra:ForwardPurchaseAgreementLiability" scale="0" unitRef="usd" id="ixv-32023">5,628,863</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="hnra:ForwardPurchaseAgreementLiability" scale="0" unitRef="usd" id="ixv-32024">1,094,097</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -9pt; padding-left: 27pt">Total current liabilities</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:LiabilitiesCurrent" scale="0" unitRef="usd" id="ixv-32025">44,782,226</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:LiabilitiesCurrent" scale="0" unitRef="usd" id="ixv-32026">20,113,049</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:LongTermDebtNoncurrent" scale="0" unitRef="usd" id="ixv-32027">28,840,078</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:LongTermDebtNoncurrent" scale="0" unitRef="usd" id="ixv-32028">37,486,206</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -9pt; padding-left: 0.25in">Warrant liability</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-31">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DerivativeLiabilities" scale="0" unitRef="usd" id="ixv-32029">4,777,971</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; text-indent: -9pt; padding-left: 0.25in">Deferred tax liability</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DeferredIncomeTaxLiabilitiesNet" scale="0" unitRef="usd" id="ixv-32030">3,758,161</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DeferredIncomeTaxLiabilitiesNet" scale="0" unitRef="usd" id="ixv-32031">6,163,140</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -9pt; padding-left: 0.25in">Asset retirement obligations</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AssetRetirementObligationsNoncurrent" scale="0" unitRef="usd" id="ixv-32032">988,223</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AssetRetirementObligationsNoncurrent" scale="0" unitRef="usd" id="ixv-32033">904,297</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -9pt; padding-left: 0.25in">Other liabilities</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OtherLiabilities" scale="0" unitRef="usd" id="ixv-32034">675,000</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OtherLiabilities" scale="0" unitRef="usd" id="ixv-32035">675,000</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -9pt; padding-left: 27pt">Total non-current liabilities</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:LiabilitiesNoncurrent" scale="0" unitRef="usd" id="ixv-32036">34,261,462</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:LiabilitiesNoncurrent" scale="0" unitRef="usd" id="ixv-32037">50,006,614</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -9pt; padding-left: 27pt">Total liabilities</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:Liabilities" scale="0" unitRef="usd" id="ixv-32038">79,043,688</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:Liabilities" scale="0" unitRef="usd" id="ixv-32039">70,119,663</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -9pt; padding-left: 9pt">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="font-weight: bold; text-align: left; text-indent: -9pt; padding-left: 9pt">Commitments and Contingencies (Note 10)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -9pt; padding-left: 9pt">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="font-weight: bold; text-align: left; text-indent: -9pt; padding-left: 9pt">Stockholders&#8217; equity</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -9pt; padding-left: 9pt">Preferred stock, $<ix:nonFraction contextRef="c11" decimals="4" format="ixt:num-dot-decimal" name="us-gaap:PreferredStockParOrStatedValuePerShare" scale="0" unitRef="usdPershares" id="ixv-32040"><ix:nonFraction contextRef="c1" decimals="4" format="ixt:num-dot-decimal" name="us-gaap:PreferredStockParOrStatedValuePerShare" scale="0" unitRef="usdPershares" id="ixv-32041">0.0001</ix:nonFraction></ix:nonFraction> par value; <ix:nonFraction contextRef="c11" decimals="INF" format="ixt:num-dot-decimal" name="us-gaap:PreferredStockSharesAuthorized" scale="0" unitRef="shares" id="ixv-32042"><ix:nonFraction contextRef="c1" decimals="INF" format="ixt:num-dot-decimal" name="us-gaap:PreferredStockSharesAuthorized" scale="0" unitRef="shares" id="ixv-32043">1,000,000</ix:nonFraction></ix:nonFraction> authorized shares, <ix:nonFraction contextRef="c11" decimals="INF" format="ixt:num-dot-decimal" name="us-gaap:PreferredStockSharesIssued" scale="0" unitRef="shares" id="ixv-32044"><ix:nonFraction contextRef="c1" decimals="INF" format="ixt:num-dot-decimal" name="us-gaap:PreferredStockSharesIssued" scale="0" unitRef="shares" id="ixv-32045"><ix:nonFraction contextRef="c11" decimals="INF" format="ixt:num-dot-decimal" name="us-gaap:PreferredStockSharesOutstanding" scale="0" unitRef="shares" id="ixv-32046"><ix:nonFraction contextRef="c1" decimals="INF" format="ixt:num-dot-decimal" name="us-gaap:PreferredStockSharesOutstanding" scale="0" unitRef="shares" id="ixv-32047">0</ix:nonFraction></ix:nonFraction></ix:nonFraction></ix:nonFraction> shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-32">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-33">-</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 2.5pt; text-indent: -9pt; padding-left: 9pt">Total liabilities and stockholders&#8217; equity</td><td style="padding-bottom: 2.5pt">&#160;</td>
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  </table><div>


</div><p style="margin-top: 0; margin-bottom: 0">&#160;</p><div>

</div><p style="text-align: center; margin-top: 0; margin-bottom: 0">The accompanying notes are an integral part of
these unaudited condensed consolidated financial statements.</p><div>

</div><p style="margin-top: 0; margin-bottom: 0">&#160;</p><div>

</div><p style="margin-top: 0; margin-bottom: 0"></p><div>

</div><!-- Field: Page; Sequence: 179; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->37<!-- Field: /Sequence --></span></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt"></p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="margin-top: 0; margin-bottom: 0">&#160;</p><div>

</div><div><a id="a_004"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>EON RESOURCES INC.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>F/K/A HNR ACQUISITION CORP</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>(Unaudited)</b></p><div>

</div><p style="margin-top: 0; margin-bottom: 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="padding-left: 0.125in; text-indent: -0.125in">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Predecessor</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="padding-left: 0.125in; text-indent: -0.125in">&#160;</td><td style="font-weight: bold">&#160;</td>
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 Ended<br/>
 September&#160;30,<br/>
 2024</td><td style="font-weight: bold">&#160;</td><td style="font-weight: bold">&#160;</td>
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 Ended<br/>
 September&#160;30, <br/>
2024</td><td style="font-weight: bold">&#160;</td><td style="border-left: Black 1.5pt solid; font-weight: bold">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Three months<br/>
 Ended<br/>
 September&#160;30,<br/>
 2023</td><td style="font-weight: bold">&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Nine months<br/>
 Ended<br/>
 September&#160;30, <br/>
2023</td><td style="font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
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    <td colspan="2">&#160;</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2">&#160;</td><td>&#160;</td><td style="border-left: Black 1.5pt solid">&#160;</td>
    <td colspan="2">&#160;</td><td>&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom">
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    <td colspan="2">&#160;</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2">&#160;</td><td>&#160;</td><td style="border-left: Black 1.5pt solid">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">Depletion, depreciation and amortization</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AccretionExpenseIncludingAssetRetirementObligations" scale="0" unitRef="usd" id="ixv-32113">83,926</ix:nonFraction></td><td style="text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:GeneralAndAdministrativeExpense" scale="0" unitRef="usd" id="ixv-32117">6,868,749</ix:nonFraction></td><td style="text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c33" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:GeneralAndAdministrativeExpense" scale="0" unitRef="usd" id="ixv-32118">981,751</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c34" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:GeneralAndAdministrativeExpense" scale="0" unitRef="usd" id="ixv-32119">3,111,130</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right"><ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OperatingExpenses" scale="0" unitRef="usd" id="ixv-32121">16,316,137</ix:nonFraction></td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid; font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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    <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right"><ix:nonFraction contextRef="c34" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OperatingExpenses" scale="0" unitRef="usd" id="ixv-32123">14,334,997</ix:nonFraction></td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left; padding-bottom: 1.5pt">Operating income (loss)</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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    <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right"><ix:nonFraction contextRef="c33" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OperatingIncomeLoss" scale="0" unitRef="usd" id="ixv-32126">617,492</ix:nonFraction></td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right"><ix:nonFraction contextRef="c34" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OperatingIncomeLoss" scale="0" unitRef="usd" id="ixv-32127">5,987,611</ix:nonFraction></td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 0.125in; text-indent: -0.125in; font-weight: bold; text-align: left">Other Income (expenses)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">Change in fair value of warrant liability</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c32" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:FairValueAdjustmentOfWarrants" scale="0" unitRef="usd" id="ixv-32128">137,911</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:FairValueAdjustmentOfWarrants" scale="0" unitRef="usd" id="ixv-32129">484,799</ix:nonFraction></td><td style="text-align: left">)</td><td style="border-left: Black 1.5pt solid">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-60">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-61">-</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c32" decimals="0" format="ixt:num-dot-decimal" name="hnra:ChangeInFairValueOfForwardPurchaseAgreementLiability" scale="0" sign="-" unitRef="usd" id="ixv-32130">4,209,294</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="hnra:ChangeInFairValueOfForwardPurchaseAgreementLiability" scale="0" sign="-" unitRef="usd" id="ixv-32131">4,534,766</ix:nonFraction></td><td style="text-align: left">)</td><td style="border-left: Black 1.5pt solid">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-62">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-63">-</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">Amortization of debt discount</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c32" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AmortizationOfDebtDiscountPremium" scale="0" unitRef="usd" id="ixv-32132">507,701</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AmortizationOfDebtDiscountPremium" scale="0" unitRef="usd" id="ixv-32133">1,982,958</ix:nonFraction></td><td style="text-align: left">)</td><td style="border-left: Black 1.5pt solid">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-64">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-65">-</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c32" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:InterestExpenseNonoperating" scale="0" unitRef="usd" id="ixv-32134">1,841,848</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">Interest income</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-67">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-68">-</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">Loss on sale of assets</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c33" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:GainLossOnDispositionOfAssets1" scale="0" sign="-" unitRef="usd" id="ixv-32143">816,011</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c34" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:GainLossOnDispositionOfAssets1" scale="0" sign="-" unitRef="usd" id="ixv-32144">816,011</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left; padding-bottom: 1.5pt">Other Income (expense)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-69">-</div></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OtherNonoperatingIncomeExpense" scale="0" unitRef="usd" id="ixv-32145">1,506</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid; padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c33" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OtherNonoperatingIncomeExpense" scale="0" unitRef="usd" id="ixv-32146">9,109</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction contextRef="c34" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OtherNonoperatingIncomeExpense" scale="0" sign="-" unitRef="usd" id="ixv-32147">74,692</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; font-weight: bold; text-align: left; padding-bottom: 1.5pt">Total other income (expenses)</td><td style="padding-bottom: 1.5pt">&#160;</td>
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NonoperatingIncomeExpense" scale="0" sign="-" unitRef="usd" id="ixv-32149">10,969,550</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="border-left: Black 1.5pt solid; padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction contextRef="c33" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NonoperatingIncomeExpense" scale="0" sign="-" unitRef="usd" id="ixv-32150">1,268,644</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction contextRef="c34" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NonoperatingIncomeExpense" scale="0" sign="-" unitRef="usd" id="ixv-32151">2,053,132</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">Loss before income taxes</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c32" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncomeLossFromContinuingOperationsBeforeIncomeTaxesExtraordinaryItemsNoncontrollingInterest" scale="0" sign="-" unitRef="usd" id="ixv-32152">4,697,096</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncomeLossFromContinuingOperationsBeforeIncomeTaxesExtraordinaryItemsNoncontrollingInterest" scale="0" sign="-" unitRef="usd" id="ixv-32153">11,577,447</ix:nonFraction></td><td style="text-align: left">)</td><td style="border-left: Black 1.5pt solid">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c33" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncomeLossFromContinuingOperationsBeforeIncomeTaxesExtraordinaryItemsNoncontrollingInterest" scale="0" sign="-" unitRef="usd" id="ixv-32154">651,152</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c34" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncomeLossFromContinuingOperationsBeforeIncomeTaxesExtraordinaryItemsNoncontrollingInterest" scale="0" unitRef="usd" id="ixv-32155">3,934,479</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left; padding-bottom: 1.5pt">Income tax (provision) benefit</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c32" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncomeTaxExpenseBenefit" scale="0" sign="-" unitRef="usd" id="ixv-32156">855,925</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncomeTaxExpenseBenefit" scale="0" sign="-" unitRef="usd" id="ixv-32157">2,404,979</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid; padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-70">-</div></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-71">-</div></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 0.125in; text-indent: -0.125in; font-weight: bold; text-align: left">Net income (loss)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c32" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProfitLoss" scale="0" sign="-" unitRef="usd" id="ixv-32158">3,841,171</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProfitLoss" scale="0" sign="-" unitRef="usd" id="ixv-32159">9,172,468</ix:nonFraction></td><td style="text-align: left">)</td><td style="border-left: Black 1.5pt solid">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c33" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProfitLoss" scale="0" sign="-" unitRef="usd" id="ixv-32160">651,152</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c34" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProfitLoss" scale="0" unitRef="usd" id="ixv-32161">3,934,479</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left; padding-bottom: 1.5pt">Net income (loss) attributable to noncontrolling interests</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-72">-</div></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-73">-</div></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid; padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-74">-</div></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-75">-</div></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left; padding-bottom: 2.5pt">Net income (loss) attributable to EON Resources, Inc.</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">(<ix:nonFraction contextRef="c32" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NetIncomeLoss" scale="0" sign="-" unitRef="usd" id="ixv-32162">3,841,171</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">)</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">(<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NetIncomeLoss" scale="0" sign="-" unitRef="usd" id="ixv-32163">9,172,468</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">)</td><td style="border-left: Black 1.5pt solid; padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">(<ix:nonFraction contextRef="c33" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NetIncomeLoss" scale="0" sign="-" unitRef="usd" id="ixv-32164">651,152</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">)</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c34" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NetIncomeLoss" scale="0" unitRef="usd" id="ixv-32165">3,934,479</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left; padding-bottom: 2.5pt">Weighted average share outstanding, common stock - basic and diluted</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c32" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding" scale="0" unitRef="shares" id="ixv-32166"><ix:nonFraction contextRef="c32" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:WeightedAverageNumberOfSharesIssuedBasic" scale="0" unitRef="shares" id="ixv-32167">5,733,857</ix:nonFraction></ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding" scale="0" unitRef="shares" id="ixv-32168"><ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:WeightedAverageNumberOfSharesIssuedBasic" scale="0" unitRef="shares" id="ixv-32169">5,483,959</ix:nonFraction></ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid; padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; text-align: right"><div style="-sec-ix-hidden: hidden-fact-76"><div style="-sec-ix-hidden: hidden-fact-77">-</div></div></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; text-align: right"><div style="-sec-ix-hidden: hidden-fact-78"><div style="-sec-ix-hidden: hidden-fact-79">-</div></div></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left; padding-bottom: 2.5pt">Net income (loss) per share of common stock &#8211; basic and diluted</td><td style="padding-bottom: 2.5pt">&#160;</td>
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  </table><div>


</div><p style="margin-top: 0; margin-bottom: 0">&#160;</p><div>

</div><p style="text-align: center; margin-top: 0; margin-bottom: 0">The accompanying notes are an integral part of
these unaudited condensed consolidated financial statements.</p><div>

</div><p style="margin-top: 0; margin-bottom: 0">&#160;</p><div>

</div><p style="margin-top: 0; margin-bottom: 0"></p><div>

</div><!-- Field: Page; Sequence: 180; Value: 1 --><div>
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</div><p style="margin-top: 0; margin-bottom: 0">&#160;</p><div>

</div><div><a id="a_005"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>EON RESOURCES INC.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>F/K/A HNR ACQUISITION CORP</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>CONDENSED CONSOLIDATED STATEMENTS OF CHANGES
IN STOCKHOLDERS&#8217;/OWNERS&#8217; EQUITY (DEFICIT)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>(Unaudited)</b></p><div>

</div><p style="margin-top: 0; margin-bottom: 0">&#160;</p><div>

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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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</div><p style="margin-top: 0; margin-bottom: 0">&#160;</p><div>

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  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-indent: -0.125in; padding-left: 0.125in">Balance &#8211; June 30, 2024</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-148">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  </table><div>




</div><p style="margin-top: 0; margin-bottom: 0">&#160;</p><div>

</div><p style="text-align: center; margin-top: 0; margin-bottom: 0">The accompanying notes are an integral part of
these unaudited condensed consolidated financial statements.</p><div>

</div><p style="margin-top: 0; margin-bottom: 0">&#160;</p><div>

</div><p style="margin-top: 0; margin-bottom: 0"></p><div>

</div><!-- Field: Page; Sequence: 181; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->39<!-- Field: /Sequence --></span></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt"></p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="margin-top: 0; margin-bottom: 0">&#160;</p><div>

</div><div><a id="a_006"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>EON RESOURCES INC.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>F/K/A HNR ACQUISITION CORP</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>(UNAUDITED)</b></p><div>

</div><p style="margin-top: 0; margin-bottom: 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="text-indent: -0.125in; padding-left: 0.125in">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Successor</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="border-left: Black 1.5pt solid; font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Predecessor</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-indent: -0.125in; padding-left: 0.125in">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">September&#160;30, <br/> 2023</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-indent: -0.125in; padding-left: 0.125in; font-weight: bold">Operating activities:</td><td>&#160;</td>
    <td colspan="2" style="text-align: right">&#160;</td><td>&#160;</td><td style="border-left: Black 1.5pt solid">&#160;</td>
    <td colspan="2" style="text-align: right">&#160;</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">(<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProfitLoss" scale="0" sign="-" unitRef="usd" id="ixv-32249">9,172,468</ix:nonFraction></td><td style="width: 1%; text-align: left">)</td><td style="border-left: Black 1.5pt solid; width: 1%">&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td style="text-indent: -0.125in; padding-left: 0.25in; text-align: left">Adjustments to reconcile net income to net cash provided by operating activities:</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-196">-</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -0.125in; padding-left: 0.375in; text-align: left">Gain on extinguishment of liabilities</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td style="text-indent: -0.125in; padding-left: 0.375in; text-align: left">Change in fair value of unsettled derivatives</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -0.125in; padding-left: 0.375in; text-align: left">Change in fair value of warrant liability</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-199">-</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-indent: -0.125in; padding-left: 0.375in; text-align: left">Change in fair value of forward purchase agreement</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -0.125in; padding-left: 0.375in; text-align: left">Change in other property, plant, and equipment, net</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-201">-</div></td><td style="text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid">&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td style="text-indent: -0.125in; padding-left: 0.375in; text-align: left">Loss on sale of assets</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-202">-</div></td><td style="text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -0.125in; padding-left: 0.375in; text-align: left">Changes in operating assets and liabilities:</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-indent: -0.125in; padding-left: 0.5in; text-align: left">Accounts receivable</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInAccountsReceivable" scale="0" sign="-" unitRef="usd" id="ixv-32267">132,340</ix:nonFraction></td><td style="text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c34" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInAccountsReceivable" scale="0" unitRef="usd" id="ixv-32268">198,571</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -0.125in; padding-left: 0.5in; text-align: left">Prepaid expenses and other assets</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInPrepaidDeferredExpenseAndOtherAssets" scale="0" sign="-" unitRef="usd" id="ixv-32269">177,793</ix:nonFraction></td><td style="text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c34" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInPrepaidDeferredExpenseAndOtherAssets" scale="0" unitRef="usd" id="ixv-32270">53,155</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-indent: -0.125in; padding-left: 0.5in; text-align: left">Related party note receivable interest income</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-203">-</div></td><td style="text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c34" decimals="0" format="ixt:num-dot-decimal" name="hnra:InterestWithdrawnFromTrustAccountToPayForFranchiseAndFederalIncomeTaxes" scale="0" sign="-" unitRef="usd" id="ixv-32271">266,771</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -0.125in; padding-left: 0.5in; text-align: left">Accounts payable</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInOtherAccountsPayableAndAccruedLiabilities" scale="0" unitRef="usd" id="ixv-32272">1,787,285</ix:nonFraction></td><td style="text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c34" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInOtherAccountsPayableAndAccruedLiabilities" scale="0" unitRef="usd" id="ixv-32273">626,309</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-indent: -0.125in; padding-left: 0.5in; text-align: left">Accrued liabilities and other</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInAccruedSalaries" scale="0" unitRef="usd" id="ixv-32274">3,028,687</ix:nonFraction></td><td style="text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c34" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInAccruedSalaries" scale="0" unitRef="usd" id="ixv-32275">325,992</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -0.125in; padding-left: 0.5in; text-align: left">Royalties payable</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInRoyaltiesPayable" scale="0" unitRef="usd" id="ixv-32276">1,510,124</ix:nonFraction></td><td style="text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c34" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInRoyaltiesPayable" scale="0" unitRef="usd" id="ixv-32277">364,404</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-indent: -0.125in; padding-left: 0.5in; text-align: left">Royalties payable, related party</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="hnra:IncreaseDecreaseInRoyaltiesPayableRelatedParty" scale="0" unitRef="usd" id="ixv-32278">224,434</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid; padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c34" decimals="0" format="ixt:num-dot-decimal" name="hnra:IncreaseDecreaseInRoyaltiesPayableRelatedParty" scale="0" unitRef="usd" id="ixv-32279">808,329</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -0.125in; padding-left: 0.625in; text-align: left; padding-bottom: 1.5pt">Net cash provided by operating activities</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NetCashProvidedByUsedInOperatingActivities" scale="0" unitRef="usd" id="ixv-32280">3,346,362</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid; padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c34" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NetCashProvidedByUsedInOperatingActivities" scale="0" unitRef="usd" id="ixv-32281">8,311,832</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-indent: -0.125in; padding-left: 0.125in; font-weight: bold; text-align: left">Investing activities:</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -0.125in; padding-left: 0.25in; text-align: left">Development of crude oil and gas properties</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PaymentsToAcquireOilAndGasPropertyAndEquipment" scale="0" unitRef="usd" id="ixv-32282">3,275,667</ix:nonFraction></td><td style="text-align: left">)</td><td style="border-left: Black 1.5pt solid">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c34" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PaymentsToAcquireOilAndGasPropertyAndEquipment" scale="0" unitRef="usd" id="ixv-32283">4,867,872</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-indent: -0.125in; padding-left: 0.25in; text-align: left">Purchases of other equipment</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PaymentsToAcquireOtherPropertyPlantAndEquipment" scale="0" unitRef="usd" id="ixv-32284">20,000</ix:nonFraction></td><td style="text-align: left">)</td><td style="border-left: Black 1.5pt solid">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-204">-</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -0.125in; padding-left: 0.25in; text-align: left">Trust Account withdrawals</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-205">-</div></td><td style="text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-206">-</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-indent: -0.125in; padding-left: 0.25in; text-align: left; padding-bottom: 1.5pt">Issuance of related party note receivable</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-207">-</div></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid; padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction contextRef="c34" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PaymentsToAcquireNotesReceivable" scale="0" unitRef="usd" id="ixv-32285">190,997</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -0.125in; padding-left: 0.375in; text-align: left; padding-bottom: 1.5pt">Net cash used in investing activities</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NetCashProvidedByUsedInInvestingActivities" scale="0" sign="-" unitRef="usd" id="ixv-32286">3,295,667</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="border-left: Black 1.5pt solid; padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction contextRef="c34" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NetCashProvidedByUsedInInvestingActivities" scale="0" sign="-" unitRef="usd" id="ixv-32287">5,058,869</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-indent: -0.125in; padding-left: 0.125in; font-weight: bold; text-align: left">Financing activities:</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -0.125in; padding-left: 0.25in; text-align: left">Repayments of long-term debt</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:RepaymentsOfLongTermDebt" scale="0" unitRef="usd" id="ixv-32288">2,945,312</ix:nonFraction></td><td style="text-align: left">)</td><td style="border-left: Black 1.5pt solid">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c34" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:RepaymentsOfLongTermDebt" scale="0" unitRef="usd" id="ixv-32289">2,000,000</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-indent: -0.125in; padding-left: 0.25in; text-align: left">Proceeds of short-term notes payable</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProceedsFromShortTermDebt" scale="0" unitRef="usd" id="ixv-32290">967,500</ix:nonFraction></td><td style="text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-208">&#160;</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -0.125in; padding-left: 0.25in; text-align: left">Repayment of short-term notes payable</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:RepaymentsOfShortTermDebt" scale="0" unitRef="usd" id="ixv-32291">421,963</ix:nonFraction></td><td style="text-align: left">)</td><td style="border-left: Black 1.5pt solid">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-209">&#160;</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-indent: -0.125in; padding-left: 0.25in; text-align: left">Proceeds from related party notes payable</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProceedsFromRelatedPartyDebt" scale="0" unitRef="usd" id="ixv-32292">450,000</ix:nonFraction></td><td style="text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-210">-</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -0.125in; padding-left: 0.25in; text-align: left">Repayment of related party notes payable</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProceedsFromRepaymentsOfRelatedPartyDebt" scale="0" sign="-" unitRef="usd" id="ixv-32293">43,750</ix:nonFraction></td><td style="text-align: left">)</td><td style="border-left: Black 1.5pt solid">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-211">-</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-indent: -0.125in; padding-left: 0.25in; text-align: left; padding-bottom: 1.5pt">Proceeds from sale of common stock</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-indent: -0.125in; padding-left: 0.25in; text-align: left; padding-bottom: 4pt">Amounts included in the measurement of operating lease liabilities</td><td style="padding-bottom: 4pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -0.125in; padding-left: 0.125in">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -0.125in; padding-left: 0.25in; text-align: left; padding-bottom: 4pt">Accrued purchases of property and equipment at period end</td><td style="padding-bottom: 4pt">&#160;</td>
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</div><p style="margin-top: 0; margin-bottom: 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">The accompanying notes are an integral part of
these unaudited condensed consolidated financial statements.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

</div><!-- Field: Page; Sequence: 182; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->40<!-- Field: /Sequence --></span></p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><div><a id="a_007"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>EON RESOURCES INC.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>F/K/A HNR ACQUISITION CORP<br/>
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><ix:nonNumeric contextRef="c0" continuedAt="_NatureOfOperations-c0_cont_1" escape="true" name="us-gaap:NatureOfOperations" id="ixv-27590"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>NOTE 1&#160;&#8212;&#160;DESCRIPTION OF ORGANIZATION AND BUSINESS
OPERATIONS</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>&#160;</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>Organization and General</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">EON Resources, Inc. (formerly HNR Acquisition
Corp) (the &#8220;Company&#8221;) was incorporated in Delaware on December&#160;9, 2020. The Company was a blank check company formed
for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination
with one or more businesses (the &#8220;Business Combination&#8221;). The Company is an &#8220;emerging growth company,&#8221; as defined
in Section&#160;2(a)&#160;of the Securities Act&#160;of&#160;1933, as amended, or the &#8220;Securities Act,&#8221; as modified by the
Jumpstart Our Business Startups Act&#160;of&#160;2012 (the &#8220;JOBS Act&#8221;). On September 16, 2024, the Company filed a Certificate
of Amendment (the &#8220;Certificate of Amendment&#8221;) to its Amended and Restated Certificate of Incorporation with the Secretary
of State of the State of Delaware to change the Company&#8217;s name from &#8220;HNR Acquisition Corp&#8221; to &#8220;EON Resources Inc.&#8221;,
effective on September 17, 2024.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The registration statement for the Company&#8217;s
IPO was declared effective on February 10, 2022 (the &#8220;Effective Date&#8221;). On February 15, 2022, the Company consummated the
IPO of <ix:nonFraction contextRef="c116" decimals="0" format="ixt:num-dot-decimal" name="hnra:UnitsIssuedDuringPeriodSharesNewIssues" scale="0" unitRef="shares" id="ixv-32309">7,500,000</ix:nonFraction> units (the &#8220;Units&#8221; and, with respect to the common stock included in the Units sold, the &#8220;Public Shares&#8221;),
at $<ix:nonFraction contextRef="c116" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:SharesIssuedPricePerShare" scale="0" unitRef="usdPershares" id="ixv-32310">10.00</ix:nonFraction> per Unit. Additionally, the underwriter fully exercised its option to purchase <ix:nonFraction contextRef="c116" decimals="0" format="ixt:num-dot-decimal" name="hnra:UnitsPurchasedDuringPeriodShares" scale="0" unitRef="shares" id="ixv-32311">1,125,000</ix:nonFraction> additional Units. Simultaneously with
the closing of the IPO, the Company consummated the sale of <ix:nonFraction contextRef="c118" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:SaleOfStockNumberOfSharesIssuedInTransaction" scale="0" unitRef="shares" id="ixv-32312">505,000</ix:nonFraction> units (the &#8220;Private Placement Units&#8221;) at a price of $<ix:nonFraction contextRef="c117" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:SaleOfStockPricePerShare" scale="0" unitRef="usdPershares" id="ixv-32313">10.00</ix:nonFraction>
per unit generating proceeds of $<ix:nonFraction contextRef="c118" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:SaleOfStockConsiderationReceivedOnTransaction" scale="0" unitRef="usd" id="ixv-32314">5,050,000</ix:nonFraction> in a private placement to HNRAC Sponsors, LLC, the Company&#8217;s sponsor (the &#8220;Sponsor&#8221;)
and EF Hutton (formerly Kingswood Capital Markets) (&#8220;EF Hutton&#8221;).</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Sponsor and other parties, purchased, in the
aggregate, <ix:nonFraction contextRef="c299" decimals="0" format="ixt:num-dot-decimal" name="hnra:UnitsIssuedDuringPeriodSharesNewIssues" scale="0" unitRef="shares" id="ixv-32315">505,000</ix:nonFraction> units (&#8220;Private Placement Units&#8221;) at a price of $<ix:nonFraction contextRef="c299" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:SharesIssuedPricePerShare" scale="0" unitRef="usdPershares" id="ixv-32316">10.00</ix:nonFraction> per Private Placement Unit in a private placement
which included a share of common stock and warrant to purchase three quarters of <ix:nonFraction contextRef="c300" decimals="0" format="ixt-sec:numwordsen" name="hnra:NumberOfSharesIssuedPerUnit" scale="0" unitRef="shares" id="ixv-32317">one</ix:nonFraction> share of common stock at an exercise price of $<ix:nonFraction contextRef="c301" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:ClassOfWarrantOrRightExercisePriceOfWarrantsOrRights1" scale="0" unitRef="usdPershares" id="ixv-32318">11.50</ix:nonFraction>
per share, subject to certain adjustments (&#8220;Private Placement Warrants&#8221; and together, the &#8220;Private Placement&#8221;)
that occurred immediately prior to the Public Offering.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">Effective November 15,
2023, the Company completed its business combination as described in Note 3. Through its subsidiary Pogo Resources, LLC, a Texas limited
liability Company &#8220;(&#8220;Pogo&#8221; or &#8220;Pogo Resources&#8221;) and its subsidiary LH Operating, LLC, a Texas limited liability
company &#8220;(&#8220;LHO&#8221;), the Company is an independent oil and natural gas company focused on the acquisition, development,
exploration, and production of oil and natural gas properties in the Permian Basin. The Permian Basin is located in west Texas and southeastern
New Mexico and is characterized by high oil and liquids-rich natural gas content, multiple vertical and horizontal target horizons, extensive
production histories, long-lived reserves and historically high drilling success rates. The Company&#8217;s properties are in the Grayburg-Jackson
Field in Eddy County, New Mexico, which is a sub-area of the Permian Basin. The Company focuses exclusively on vertical development drilling.&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Inflation Reduction Act of 2022</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On August 16, 2022, the Inflation Reduction Act
of 2022 (the &#8220;IR Act&#8221;) was signed into federal law. The IR Act provides for, among other things, a new U.S. federal <ix:nonFraction contextRef="c302" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:EffectiveIncomeTaxRateContinuingOperations" scale="-2" unitRef="pure" id="ixv-32319">1</ix:nonFraction>% excise
tax on certain repurchases (including redemptions) of stock by publicly traded U.S. domestic corporations and certain U.S. domestic subsidiaries
of publicly traded foreign corporations occurring on or after January 1, 2023. The excise tax is imposed on the repurchasing corporation
itself, not its stockholders from which shares are repurchased. The amount of the excise tax is generally <ix:nonFraction contextRef="c0" decimals="2" format="ixt:num-dot-decimal" name="hnra:PercentageofExciseTaxofTheFairMarketValue" scale="-2" unitRef="pure" id="ixv-32320">1</ix:nonFraction>% of the fair market value
of the shares repurchased at the time of the repurchase. However, for purposes of calculating the excise tax, repurchasing corporations
are permitted to net the fair market value of certain new stock issuances against the fair market value of stock repurchases during the
same taxable year. In addition, certain exceptions apply to the excise tax. The U.S. Department of the Treasury (the &#8220;Treasury&#8221;)
has been given authority to provide regulations and other guidance to carry out and prevent the abuse or avoidance of the excise tax.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:nonNumeric><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:continuation id="_NatureOfOperations-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Any redemption or other repurchase that occurs
after December 31, 2022, in connection with a Business Combination, extension vote or otherwise, may be subject to the excise tax. Whether
and to what extent the Company would be subject to the excise tax in connection with a Business Combination, extension vote or otherwise
would depend on a number of factors, including (i) the fair market value of the redemptions and repurchases in connection with the Business
Combination, extension or otherwise, (ii) the structure of a Business Combination, (iii) the nature and amount of any &#8220;PIPE&#8221;
or other equity issuances in connection with a Business Combination (or otherwise issued not in connection with a Business Combination
but issued within the same taxable year of a Business Combination) and (iv) the content of regulations and other guidance from the Treasury.
In addition, because the excise tax would be payable by the Company and not by the redeeming holder, the mechanics of any required payment
of the excise tax have not been determined. The foregoing could cause a reduction in the cash available on hand to complete a Business
Combination and in the Company&#8217;s ability to complete a Business Combination.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On May 11, 2023, in connection with the stockholder vote for
the amendment to the Company&#8217;s certificate of incorporation, a total of <ix:nonFraction contextRef="c303" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:StockIssuedDuringPeriodSharesNewIssues" scale="0" unitRef="shares" id="ixv-32321">4,115,597</ix:nonFraction> Public Shares for an aggregate redemption amount
of $<ix:nonFraction contextRef="c304" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:TemporaryEquityAggregateAmountOfRedemptionRequirement" scale="0" unitRef="usd" id="ixv-32322">43,318,207</ix:nonFraction> were redeemed from the Trust Account by the stockholders of the Company. On November 15, 2023, a total of <ix:nonFraction contextRef="c305" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:StockRedeemedOrCalledDuringPeriodShares" scale="0" unitRef="shares" id="ixv-32323">3,323,707</ix:nonFraction> Public
Shares were redeemed for an aggregate redemption amount of $<ix:nonFraction contextRef="c305" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:StockRedeemedOrCalledDuringPeriodValue" scale="0" unitRef="usd" id="ixv-32324">12,346,791</ix:nonFraction>. As a result of these redemptions of common stock, the Company
recognized an estimated liability for the excise tax of $<ix:nonFraction contextRef="c125" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ExciseAndSalesTaxes" scale="0" unitRef="usd" id="ixv-32325">474,837</ix:nonFraction>, included in <i>Accrued liabilities and other </i>on the Company&#8217;s
consolidated balance sheet pursuant to the <ix:nonFraction contextRef="c126" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:EffectiveIncomeTaxRateContinuingOperations" scale="-2" unitRef="pure" id="ixv-32326">1</ix:nonFraction>% excise tax under the IR Act partially offset by issuance of common stock subsequent to the
redemptions. The liability does not impact the consolidated statements of operations and is offset against accumulated deficit.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">At September 30, 2024, the Company had $<ix:nonFraction contextRef="c306" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:Cash" scale="0" unitRef="usd" id="ixv-32327">2,746,896</ix:nonFraction>,
in cash and a working capital deficit of $<ix:nonFraction contextRef="c306" decimals="0" format="ixt:num-dot-decimal" name="hnra:WorkingCapitalDeficit" scale="0" unitRef="usd" id="ixv-32328">38,801,444</ix:nonFraction>. These conditions raise substantial doubt about the Company&#8217;s ability to continue
as a going concern within one year after the date that the financial statements are issued. The Company had positive cash flow from operations
of $<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NetCashProvidedByUsedInOperatingActivities" scale="0" unitRef="usd" id="ixv-32329">3,346,362</ix:nonFraction> for the nine months ended September 30, 2024 and $<ix:nonFraction contextRef="c307" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NetCashProvidedByUsedInOperatingActivities" scale="0" unitRef="usd" id="ixv-32330">8,675,037</ix:nonFraction> for the year ended December 31, 2023, on a pro forma basis of
the combined Successor and Predecessor periods. Additionally, management&#8217;s plans to alleviate this substantial doubt by 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 under the Common Stock Purchase Agreement. The Company has a three-year Common Stock Purchase Agreement
with a maximum funding limit of $<ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:RepurchaseAgreementCounterpartyAmountAtRisk" scale="0" unitRef="usd" id="ixv-32331">150,000,000</ix:nonFraction> that can fund the Company operations and production growth, and be used to reduce liabilities
of the Company, subject to the Company&#8217;s Form S-1 Registration Statement, which was declared effective by the Securities and Exchange
Commission (&#8220;SEC&#8221;) on August 9, 2024. Through September 30, 2024, the Company has received $<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:SaleOfStockConsiderationReceivedOnTransaction" scale="0" unitRef="usd" id="ixv-32332">1,184,272</ix:nonFraction> in cash proceeds related
to the sale of <ix:nonFraction contextRef="c308" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:SaleOfStockNumberOfSharesIssuedInTransaction" scale="0" unitRef="shares" id="ixv-32333">1,000,000</ix:nonFraction> shares of common stock under the Common Stock Purchase Agreement.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.</p></ix:continuation><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;&#160;</p><div>

</div><ix:nonNumeric contextRef="c0" continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_1" escape="true" name="us-gaap:SignificantAccountingPoliciesTextBlock" id="ixv-27638"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>NOTE 2&#160;&#8212;&#160;SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p>

<ix:nonNumeric contextRef="c0" continuedAt="_BasisOfAccounting-c0_cont_1" escape="true" name="us-gaap:BasisOfAccounting" id="ixv-27643"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Basis of Presentation:</i></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation continuedAt="_BasisOfAccounting-c0_cont_2" id="_BasisOfAccounting-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On November 15, 2023 (the &#8220;Closing Date&#8221;),
the Company consummated a business combination which resulted in the acquisition of Pogo Resources, LLC, a Texas limited liability Company
(&#8220;Pogo&#8221; or &#8220;Pogo Resources&#8221;) and its subsidiary LH Operating, LLC, a Texas limited liability company (&#8220;LHO&#8221;,
and collectively, the &#8220;Pogo Business&#8221;) (the &#8220;Acquisition&#8221;). The Company was deemed the accounting acquirer in
the Acquisition based on an analysis of the criteria outlined in Accounting Standards Codification (&#8220;ASC&#8221;) 805, Business Combinations,
and the Pogo Business was deemed to be the Predecessor entity. Accordingly, the historical consolidated financial statements of the Pogo
Business became the historical financial statements of the Company&#8217;s upon consummation of the Acquisition. As a result, the financial
statements included in this report reflect (i) the historical operating results of Pogo Business prior to the Acquisition (&#8220;Predecessor&#8221;)
and (ii) the combined results of the companies, including Pogo Business following the closing of the Acquisition (&#8220;Successor&#8221;).
The accompanying financial statements include a Predecessor period, which was the three and nine months ended September 30, 2023, and
Successor period for the three and nine months ended September 30, 2024. As a result of the Acquisition, the results of operations, financial
position and cash flows of the Predecessor and Successor may not be directly comparable. A black-line between the Successor and Predecessor
periods has been placed in the consolidated financial statements and in the tables to the notes to the consolidated financial statements
to highlight the lack of comparability between these two periods as the Acquisition resulted in a new basis of accounting for the Pogo
Business. See Note 3 for additional information.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation></ix:nonNumeric><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_2" id="_SignificantAccountingPoliciesTextBlock-c0_cont_1"><ix:continuation continuedAt="_BasisOfAccounting-c0_cont_3" id="_BasisOfAccounting-c0_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The accompanying unaudited consolidated financial
statements have been prepared in accordance with accounting principles generally accepted in the United States of America (&#8220;GAAP&#8221;)
for interim financial information and in accordance with the instructions to Condensed Form&#160;10-Q and Article&#160;8 of Regulation
S-X of the SEC. Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP
have been condensed or omitted, pursuant to the rules&#160;and regulations of the SEC for interim financial reporting. Accordingly, they
do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or
cash flows. In the opinion of management, the accompanying unaudited consolidated financial statements include all adjustments, consisting
of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows
for the period presented.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation id="_BasisOfAccounting-c0_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The accompanying unaudited condensed consolidated
financial statements should be read in conjunction with the Company&#8217;s Annual Report on Form&#160;10-K as filed with the SEC on May
2, 2024. The interim results for the three and nine months ended September 30, 2024 are not necessarily indicative of the results to be
expected for the year ending December&#160;31, 2024 or for any future periods.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:nonNumeric contextRef="c0" continuedAt="_ConsolidationPolicyTextBlock-c0_cont_1" escape="true" name="us-gaap:ConsolidationPolicyTextBlock" id="ixv-27672"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Principles of Consolidation</i></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation id="_ConsolidationPolicyTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The accompanying consolidated financial statements
include the accounts of the Company and its subsidiaries. All significant intercompany balances and transactions have been eliminated
in consolidation.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:nonNumeric contextRef="c0" continuedAt="hnra_EmergingGrowthCompanyPolicyTextBlock-c0_cont_1" escape="true" name="hnra:EmergingGrowthCompanyPolicyTextBlock" id="ixv-27679"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>Emerging Growth Company:</i></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation id="hnra_EmergingGrowthCompanyPolicyTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Section&#160;102(b)(1)&#160;of the JOBS Act exempts
emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that
is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered
under the Securities Exchange&#160;Act&#160;of&#160;1934) are required to comply with the new or revised financial accounting standards.
The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply
to non-emerging growth companies but any such an election to opt out is irrevocable. The Company has elected not to opt out of such extended
transition period which means that when a standard is issued or revised and it has different application dates for public or private companies,
the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised
standard. This may make comparison of the Company&#8217;s consolidated financial statements with another public company which is neither
an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible
because of the potential differences in accounting standards used.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:nonNumeric contextRef="c0" continuedAt="_UseOfEstimates-c0_cont_1" escape="true" name="us-gaap:UseOfEstimates" id="ixv-27686"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><i>Use of Estimates</i></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation id="_UseOfEstimates-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The preparation of financial statements in conformity
with GAAP requires the Company&#8217;s management to make estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Significant estimates and assumptions reflected in the financial statements include: i) estimates of proved
reserves of oil and natural gas, which affect the calculation of depletion, depreciation, and amortization (&#8220;DD&amp;A&#8221;) and
impairment of proved oil and natural gas properties, ii) impairment of undeveloped properties and other assets, iii) depreciation of property
and equipment; and iv) the valuation of commodity derivative instruments. These estimates are based on information available as of the
date of the financial statements; therefore, actual results could differ materially from management&#8217;s estimates using different
assumptions or under different conditions. Future production may vary materially from estimated oil and natural gas proved reserves. Actual
future prices may vary significantly from price assumptions used for determining proved reserves and for financial reporting.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p></ix:continuation></ix:continuation><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_3" id="_SignificantAccountingPoliciesTextBlock-c0_cont_2"><ix:nonNumeric contextRef="c0" continuedAt="_EarningsPerSharePolicyTextBlock-c0_cont_1" escape="true" name="us-gaap:EarningsPerSharePolicyTextBlock" id="ixv-27711"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Net Income (Loss) Per Share:</i></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation continuedAt="_EarningsPerSharePolicyTextBlock-c0_cont_2" id="_EarningsPerSharePolicyTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Net income (loss) per share of common stock is
computed by dividing net income (loss) applicable to common stockholders by the weighted average number of shares of common stock outstanding
during the period, excluding shares of common stock subject to forfeiture.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;&#160;</p>

<ix:continuation continuedAt="_EarningsPerSharePolicyTextBlock-c0_cont_3" id="_EarningsPerSharePolicyTextBlock-c0_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company&#8217;s Class B Common shares do not
have economic rights to the undistributed earnings of the Company, and are not considered participating securities under ASC 260. As such,
they are excluded from the calculation of net income (loss) per common share.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation id="_EarningsPerSharePolicyTextBlock-c0_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company has not considered the effect of the
warrants sold in the Initial Public Offering and private placement warrants to purchase an aggregate of&#160;<ix:nonFraction contextRef="c309" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:SaleOfStockNumberOfSharesIssuedInTransaction" scale="0" unitRef="shares" id="ixv-32334">6,847,500</ix:nonFraction>&#160;shares and
warrants to purchase <ix:nonFraction contextRef="c300" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:SaleOfStockNumberOfSharesIssuedInTransaction" scale="0" unitRef="shares" id="ixv-32335">4,413,000</ix:nonFraction> shares issued in connection with Private Notes Payable in the calculation of diluted income per share,
since the effective of those instruments would be anti-dilutive.&#160;As a result, diluted income (loss) per share of common stock is
the same as basic loss per share of common stock for the period presented.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;&#160;</p>

<ix:nonNumeric contextRef="c0" continuedAt="_CashAndCashEquivalentsPolicyTextBlock-c0_cont_1" escape="true" name="us-gaap:CashAndCashEquivalentsPolicyTextBlock" id="ixv-27724"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><i>Cash</i></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation id="_CashAndCashEquivalentsPolicyTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company considers all cash on hand, depository
accounts held by banks, money market accounts and investments with an original maturity of three months or less to be cash equivalents.
The Company&#8217;s cash and cash equivalents are held in financial institutions in amounts that exceed the insurance limits of the Federal
Deposit Insurance Corporation. The Company believes its counterparty risks are minimal based on the reputation and history of the institutions
selected.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

<ix:nonNumeric contextRef="c0" continuedAt="_TradeAndOtherAccountsReceivablePolicy-c0_cont_1" escape="true" name="us-gaap:TradeAndOtherAccountsReceivablePolicy" id="ixv-27731"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>Accounts Receivable</i></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<ix:continuation continuedAt="_TradeAndOtherAccountsReceivablePolicy-c0_cont_2" id="_TradeAndOtherAccountsReceivablePolicy-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">Accounts receivable consist
of receivables from crude oil and natural gas purchasers and are generally uncollateralized. Accounts receivables are typically due within
30 to 60&#160;days of the production date and 30&#160;days of the billing date and are stated at amounts due from purchasers and industry
partners. Amounts are considered past due if they have been outstanding for 60&#160;days or more. No interest is typically charged on
past due amounts.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<ix:continuation continuedAt="_TradeAndOtherAccountsReceivablePolicy-c0_cont_3" id="_TradeAndOtherAccountsReceivablePolicy-c0_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">The Company reviews its
need for an allowance for doubtful accounts on a periodic basis and determines the allowance, if any, by considering the length of time
past due, previous loss history, future net revenues associated with the debtor&#8217;s ownership interest in oil and natural gas properties
operated by the Company and the debtor&#8217;s ability to pay its obligations, among other things. The Company believes its accounts receivable
are fully collectible. Accordingly, no allowance for doubtful accounts has been provided.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<ix:continuation id="_TradeAndOtherAccountsReceivablePolicy-c0_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">As of September 30, 2024
and December&#160;31, 2023, the Company had approximately <ix:nonFraction contextRef="c310" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:ConcentrationRiskPercentage1" scale="-2" unitRef="pure" id="ixv-32336">99</ix:nonFraction>% and <ix:nonFraction contextRef="c311" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:ConcentrationRiskPercentage1" scale="-2" unitRef="pure" id="ixv-32337">96</ix:nonFraction>% of accounts receivable with two customers, respectively.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<ix:nonNumeric contextRef="c0" continuedAt="_OilAndGasPropertiesPolicyPolicyTextBlock-c0_cont_1" escape="true" name="us-gaap:OilAndGasPropertiesPolicyPolicyTextBlock" id="ixv-27744"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><i>Crude Oil and Natural
Gas Properties</i></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<ix:continuation continuedAt="_OilAndGasPropertiesPolicyPolicyTextBlock-c0_cont_2" id="_OilAndGasPropertiesPolicyPolicyTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">The Company accounts
for its crude oil and natural gas properties under the successful efforts method of accounting. Under this method, costs of proved developed
producing properties, successful exploratory wells and developmental dry hole costs are capitalized. Internal costs that are directly
related to acquisition and development activities, including salaries and benefits, are capitalized. Internal costs related to production
and similar activities are expensed as incurred. Capitalized costs are depleted by the unit-of-production method based on estimated proved
developed producing reserves. The Company calculates quarterly depletion expense by using the estimated prior period-end reserves as the
denominator. The process of estimating and evaluating crude oil and natural gas reserves is complex, requiring significant decisions in
the evaluation of available geological, geophysical, engineering, and economic data. The data for a given property may also change substantially
over time because of numerous factors, including additional development activity, evolving production history and a continual reassessment
of the viability of production under changing economic conditions. As a result, revisions in existing reserve estimates occur. Capitalized
development costs of producing oil and natural gas properties are depleted over proved developed reserves and leasehold costs are depleted
over total proved reserves. Upon the sale or retirement of significant portions of or complete fields of depreciable or depletable property,
the net book value thereof, less proceeds or salvage value, is recognized as a gain or loss.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p><div>

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geological and geophysical expenses, seismic costs on unproved leaseholds and delay rentals are expensed as incurred. Exploratory well
drilling costs, including the cost of stratigraphic test wells, are initially capitalized, but charged to expense if the well is determined
to be economically nonproductive. The status of each in-progress well is reviewed quarterly to determine the proper accounting treatment
under the successful efforts method of accounting. Exploratory well costs continue to be capitalized so long as the Company has identified
a sufficient quantity of reserves to justify completion as a producing well, is making sufficient progress assessing reserves with economic
and operating viability, and the Company remains unable to make a final determination of productivity.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<ix:continuation continuedAt="_OilAndGasPropertiesPolicyPolicyTextBlock-c0_cont_4" id="_OilAndGasPropertiesPolicyPolicyTextBlock-c0_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">If an in-progress exploratory
well is found to be economically unsuccessful prior to the issuance of the financial statements, the costs incurred prior to the end of
the reporting period are charged to exploration expense. If the Company is unable to make a final determination about the productive status
of a well prior to issuance of the financial statements, the costs associated with the well are classified as suspended well costs until
the Company has had sufficient time to conduct additional completion or testing operations to evaluate the pertinent geological and engineering
data obtained. At the time the Company can make a final determination of a well&#8217;s productive status, the well is removed from suspended
well status and the resulting accounting treatment is recorded.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;&#160;</p>

<ix:continuation id="_OilAndGasPropertiesPolicyPolicyTextBlock-c0_cont_4"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">The Successor recognized
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

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gas properties are reviewed for impairment when events and circumstances indicate a possible decline in the recoverability of the carrying
amount of such property. The Company estimates the expected future cash flows of its oil and natural gas properties and compares the undiscounted
cash flows to the carrying amount of the oil and natural gas properties, on a field-by-field basis, to determine if the carrying amount
is recoverable. If the carrying amount exceeds the estimated undiscounted future cash flows, the Company will write down the carrying
amount of the oil and natural gas properties to estimated fair value.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<ix:continuation id="_ImpairmentOrDisposalOfLongLivedAssetsPolicyTextBlock-c0_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">The Company and the Predecessor
did not recognize any impairment of oil and natural gas properties in the periods presented.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<ix:nonNumeric contextRef="c0" continuedAt="_AssetRetirementObligationsPolicy-c0_cont_1" escape="true" name="us-gaap:AssetRetirementObligationsPolicy" id="ixv-27786"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><i>Asset Retirement Obligations</i></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<ix:continuation id="_AssetRetirementObligationsPolicy-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">The Company recognizes
the fair value of an asset retirement obligation (&#8220;ARO&#8221;) in the period in which it is incurred if a reasonable estimate of
fair value can be made. The asset retirement obligation is recorded as a liability at its estimated present value, with an offsetting
increase recognized in oil and natural gas properties on the consolidated balance sheets. Periodic accretion of the discounted value of
the estimated liability is recorded as an expense in the consolidated statements of operations.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><b>&#160;</b></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

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are recorded at cost. Other property and equipment are depreciated over its estimated useful life on a straight-line basis. The Company
expenses maintenance and repairs in the period incurred. Upon retirements or dispositions of assets, the cost and related accumulated
depreciation are removed from the consolidated balance sheet with the resulting gains or losses, if any, reflected in operations.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<ix:continuation continuedAt="_PropertyPlantAndEquipmentPolicyTextBlock-c0_cont_3" id="_PropertyPlantAndEquipmentPolicyTextBlock-c0_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">Materials and supplies
are stated at the lower of cost or market and consist of oil and gas drilling or repair items such a tubing, casing, and pumping units.
These items are primarily acquired for use in future drilling or repair operations and are carried at lower of cost or market.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_5" id="_SignificantAccountingPoliciesTextBlock-c0_cont_4"><ix:continuation id="_PropertyPlantAndEquipmentPolicyTextBlock-c0_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">The Company reviews its
long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be
recoverable. If such assets are considered impaired, the impairment to be recorded is measured by the amount by which the carrying amount
of the asset exceeds its estimated fair value. The estimated fair value is determined using either a discounted future cash flow model
or another appropriate fair value method.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<ix:nonNumeric contextRef="c0" continuedAt="_DerivativesPolicyTextBlock-c0_cont_1" escape="true" name="us-gaap:DerivativesPolicyTextBlock" id="ixv-27823"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><i>Derivative Instruments</i></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

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financial instruments to mitigate its exposure to commodity price risk associated with oil prices. The Company&#8217;s derivative financial
instruments are recorded on the consolidated balance sheets as either an asset or a liability measured at fair value. The Company has
elected not to apply hedge accounting for its existing derivative financial instruments, and as a result, the Company recognizes the change
in derivative fair value between reporting periods currently in its consolidated statements of operations. The fair value of the Company&#8217;s
derivative financial instruments is determined using industry-standard models that consider various inputs including: (i)&#160;quoted
forward prices for commodities, (ii)&#160;time value of money and (iii)&#160;current market and contractual prices for the underlying
instruments, as well as other relevant economic measures. Realized gains and losses from the settlement of derivative financial instruments
and unrealized gains and unrealized losses from valuation changes in the remaining unsettled derivative financial instruments are reported
in a single line item as a component of revenues in the consolidated statements of operations. Cash flows from derivative contract settlements
are reflected in operating activities in the accompanying consolidated statements of cash flows. See Note&#160;4 for additional information
about the Company&#8217;s derivative instruments.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<ix:continuation continuedAt="_DerivativesPolicyTextBlock-c0_cont_3" id="_DerivativesPolicyTextBlock-c0_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">The Company&#8217;s credit
risk related to derivatives is a counterparties&#8217; failure to perform under derivative contracts owed to the Company. The Company
uses credit and other financial criteria to evaluate the credit standing of, and to select, counterparties to its derivative instruments.
Although the Company does not obtain collateral or otherwise secure the fair value of its derivative instruments, associated credit risk
is mitigated by the Company&#8217;s credit risk policies and procedures.&#160;</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<ix:continuation id="_DerivativesPolicyTextBlock-c0_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">The Company has entered
into International Swap Dealers Association Master Agreements (&#8220;ISDA Agreements&#8221;) with its derivative counterparty. The terms
of the ISDA Agreements provide the Company and the counterparty with rights of set off upon the occurrence of defined acts of default
by either the Company or a counterparty to a derivative, whereby the party not in default may set off all derivative liabilities owed
to the defaulting party against all derivative asset receivables from the defaulting party.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

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for sales in accordance with Accounting Standards Codification (&#8220;ASC&#8221;) 606,&#160;<i>Revenue from Contracts with Customers</i>.
Revenue is recognized when the Company satisfies a performance obligation in an amount reflecting the consideration to which it expects
to be entitled. The Company applies a five-step approach in determining the amount and timing of revenue to be recognized: (1)&#160;identifying
the contract with a customer; (2)&#160;identifying the performance obligations in the contract; (3)&#160;determining the transaction price;
(4)&#160;allocating the transaction price to the performance obligations in the contract; and (5)&#160;recognizing revenue when the performance
obligation is satisfied.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<ix:continuation continuedAt="_RevenueFromContractWithCustomerPolicyTextBlock-c0_cont_3" id="_RevenueFromContractWithCustomerPolicyTextBlock-c0_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">The Company enters into
contracts with customers to sell its oil and natural gas production. Revenue from these contracts is recognized when the Company&#8217;s
performance obligations under these contracts are satisfied, which generally occurs with the transfer of control of the oil and natural
gas to the purchaser. Control is generally considered transferred when the following criteria are met: (i)&#160;transfer of physical custody,
(ii)&#160;transfer of title, (iii)&#160;transfer of risk of loss and (iv)&#160;relinquishment of any repurchase rights or other similar
rights. Given the nature of the products sold, revenue is recognized at a point in time based on the amount of consideration the Company
expects to receive in accordance with the price specified in the contract. Consideration under oil and natural gas marketing contracts
is typically received from the purchaser one to two&#160;months after production.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

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oil marketing contracts transfer physical custody and title at or near the wellhead or a central delivery point, which is generally when
control of the oil has been transferred to the purchaser. The majority of the oil produced is sold under contracts using market-based
pricing, which price is then adjusted for differentials based upon delivery location and oil quality. To the extent the differentials
are incurred at or after the transfer of control of the oil, the differentials are included in oil revenues on the statements of operations,
as they represent part of the transaction price of the contract. If other related costs are incurred prior to the transfer of control
of the oil, those costs are included in production taxes, transportation and processing expenses on the Company&#8217;s consolidated statements
of operations, as they represent payment for services performed outside of the contract with the customer.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_6" id="_SignificantAccountingPoliciesTextBlock-c0_cont_5"><ix:continuation continuedAt="_RevenueFromContractWithCustomerPolicyTextBlock-c0_cont_5" id="_RevenueFromContractWithCustomerPolicyTextBlock-c0_cont_4"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">The Company&#8217;s natural
gas is sold at the lease location. Most of the Company&#8217;s natural gas is sold under gas purchase agreements. Under the gas purchase
agreements, the Company receives a percentage of the net production from the sale of the natural gas and residue gas, less associated
expenses incurred by the buyer.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<ix:continuation id="_RevenueFromContractWithCustomerPolicyTextBlock-c0_cont_5"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">The Company does not
disclose the value of unsatisfied performance obligations under its contracts with customers as it applies the practical expedient in
accordance with ASC&#160;606. The expedient, as described in ASC&#160;606-10-50-14(a), applies to variable consideration that is recognized
as control of the product is transferred to the customer. Since each unit of product represents a separate performance obligation, future
volumes are wholly unsatisfied, and disclosure of the transaction price allocated to remaining performance obligations is not required.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><i>&#160;</i></p>

<ix:nonNumeric contextRef="c0" continuedAt="_MajorCustomersPolicyPolicyTextBlock-c0_cont_1" escape="true" name="us-gaap:MajorCustomersPolicyPolicyTextBlock" id="ixv-27873"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><i>Customers</i></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<ix:continuation id="_MajorCustomersPolicyPolicyTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">The Company and the Predecessor,
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and 2023. Inherent to the industry is the concentration of crude oil, natural gas and natural gas liquids (&#8220;NGLs&#8221;) sales to
a limited number of customers. This concentration has the potential to impact the Company&#8217;s overall exposure to credit risk in that
its customers may be similarly affected by changes in economic and financial conditions, commodity prices or other conditions. Given the
liquidity in the market for the sale of hydrocarbons, the Company believes the loss of any single purchaser, or the aggregate loss of
several purchasers, could be managed by selling to alternative purchasers in the operating areas.&#160;</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<ix:nonNumeric contextRef="c0" continuedAt="_StandardProductWarrantyPolicy-c0_cont_1" escape="true" name="us-gaap:StandardProductWarrantyPolicy" id="ixv-27880"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><i>Warranty Obligations</i></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<ix:continuation id="_StandardProductWarrantyPolicy-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">The Company provides
an assurance-type warranty that guarantees its products comply with agreed-upon specifications. This warranty is not sold separately and
does not convey any additional goods or services to the customer; therefore, the warranty is not considered a separate performance obligation.
As the Company typically incurs minimal claims under the warranties, no liability is estimated at the time goods are delivered, but rather
at the point of a claim.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><b>&#160;</b></p>

<ix:nonNumeric contextRef="c0" continuedAt="hnra_OtherRevenuePolicyTextBlock-c0_cont_1" escape="true" name="hnra:OtherRevenuePolicyTextBlock" id="ixv-27888"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><i>Other Revenue</i></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<ix:continuation continuedAt="hnra_OtherRevenuePolicyTextBlock-c0_cont_2" id="hnra_OtherRevenuePolicyTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">Other revenue is generated
from the fees the Company charges a single customer for the disposal of water, saltwater, brine, brackish water, and other water (collectively,
&#8220;Water&#8221;) into the Company&#8217;s water injection system. Revenue recognized under the agreement is variable in nature and
primarily based on the volume of Water accepted during the period.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<ix:continuation continuedAt="hnra_OtherRevenuePolicyTextBlock-c0_cont_3" id="hnra_OtherRevenuePolicyTextBlock-c0_cont_2"><ix:nonNumeric contextRef="c0" continuedAt="hnra_WarrantLiabilitiesPolicyTextBlock-c0_cont_1" escape="true" name="hnra:WarrantLiabilitiesPolicyTextBlock" id="ixv-27896"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><i>Warrant Liabilities</i></p></ix:nonNumeric></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; ">&#160;</p>

<ix:continuation continuedAt="hnra_OtherRevenuePolicyTextBlock-c0_cont_4" id="hnra_OtherRevenuePolicyTextBlock-c0_cont_3"><ix:continuation continuedAt="hnra_WarrantLiabilitiesPolicyTextBlock-c0_cont_2" id="hnra_WarrantLiabilitiesPolicyTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">The Company provides
an assurance-type warranty that guarantees its products comply with agreed-upon specifications. This warranty is not sold separately and
does not convey any additional goods or services to the customer; therefore, the warranty is not considered a separate performance obligation.
As the Company typically incurs minimal claims under the warranties, no liability is estimated at the time goods are delivered, but rather
at the point of a claim.</p></ix:continuation></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><b>&#160;</b></p>

<ix:continuation continuedAt="hnra_OtherRevenuePolicyTextBlock-c0_cont_5" id="hnra_OtherRevenuePolicyTextBlock-c0_cont_4"><ix:continuation continuedAt="hnra_WarrantLiabilitiesPolicyTextBlock-c0_cont_3" id="hnra_WarrantLiabilitiesPolicyTextBlock-c0_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><i>Other Revenue</i></p></ix:continuation></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<ix:continuation id="hnra_OtherRevenuePolicyTextBlock-c0_cont_5"><ix:continuation continuedAt="hnra_WarrantLiabilitiesPolicyTextBlock-c0_cont_4" id="hnra_WarrantLiabilitiesPolicyTextBlock-c0_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">Other revenue is generated
from the fees the Company charges a single customer for the disposal of water, saltwater, brine, brackish water, and other water (collectively,
&#8220;Water&#8221;) into the Company&#8217;s water injection system. Revenue recognized under the agreement is variable in nature and
primarily based on the volume of Water accepted during the period.</p></ix:continuation></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<ix:continuation continuedAt="hnra_WarrantLiabilitiesPolicyTextBlock-c0_cont_5" id="hnra_WarrantLiabilitiesPolicyTextBlock-c0_cont_4"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><i>Warrant Liabilities</i></p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; ">&#160;</p>

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or liability-classified instruments based on an assessment of the warrant&#8217;s specific terms and applicable authoritative guidance
in Financial Accounting Standards Board (&#8220;FASB&#8221;) Accounting Standards Codification ASC 480, Distinguishing Liabilities from
Equity (&#8220;ASC 480&#8221;) and ASC 815, Derivatives and Hedging (&#8220;ASC 815&#8221;). The assessment considers whether the warrants
are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants
meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company&#8217;s
own common stock, among other conditions for equity classification. This assessment is conducted at the time of warrant issuance and as
of each subsequent quarterly period end date while the warrants are outstanding.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

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Standards Codification ASC 815-40, Derivatives and Hedging&#8212;Contracts in Entity&#8217;s Own Equity, the warrants issued in connection
with the Private Notes Payable do not meet the criteria for equity classification due to the redemption right whereby the holder may require
the Company to settle the warrant in cash 18 months after the closing of the MIPA, and must be recorded as liabilities. The warrants are
measured at fair value at inception and at each reporting date in accordance with ASC 820<i>, Fair Value Measurement</i>, with changes
in fair value recognized in the statements of operations in the period of change. The Public Warrants issued in connection with the Company&#8217;s
initial public offering are classified as equity instruments.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

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that the Forward Purchase Agreement Put Option, including the Maturity Consideration, within the Forward Purchase Agreement is (i) a freestanding
financial instrument and (ii) a liability (i.e., an in-substance written put option). This liability was recorded as a liability at fair
value on the consolidated balance sheet as of the reporting date in accordance with ASC 480. The fair value of the liability was estimated
using a Monte-Carlo Simulation in a risk-neutral framework. Specifically, the future stock price is simulated assuming a Geometric Brownian
Motion (&#8220;GBM&#8221;). For each simulated path, the forward purchase value is calculated based on the contractual terms and then
discounted back to present. Finally, the value of the forward is calculated as the average present value over all simulated paths. The
model also considered the likelihood of a dilutive offering of common stock.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>&#160;</i></p>

<ix:nonNumeric contextRef="c0" continuedAt="_ConcentrationRiskCreditRisk-c0_cont_1" escape="true" name="us-gaap:ConcentrationRiskCreditRisk" id="ixv-27949"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>Concentration of Credit Risk</i></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p>

<ix:continuation id="_ConcentrationRiskCreditRisk-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Financial instruments that potentially subject
the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed the Federal
Depository Insurance Coverage (&#8220;FDIC&#8221;) of $<ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CashFDICInsuredAmount" scale="0" unitRef="usd" id="ixv-32344">250,000</ix:nonFraction>. As of September 30, 2024, the Company&#8217;s cash balances exceeded the
FDIC limit by $<ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CashUninsuredAmount" scale="0" unitRef="usd" id="ixv-32345">2,404,329</ix:nonFraction>. At September 30, 2024, the Company had not experienced losses on this account and management believes the Company
is not exposed to significant risks on such account.&#160;&#160;</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:nonNumeric contextRef="c0" continuedAt="_IncomeTaxPolicyTextBlock-c0_cont_1" escape="true" name="us-gaap:IncomeTaxPolicyTextBlock" id="ixv-27957"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Income Taxes</i></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

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of accounting for income taxes under FASB ASC&#160;740, &#8220;Income Taxes.&#8221; Deferred tax assets and liabilities are recognized
for the estimated future tax consequences attributable to differences between the financial statements carrying amounts of existing assets
and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply
to taxable income in the&#160;years in which those temporary differences are expected to be recovered or settled. The effect on deferred
tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation
allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The Company is subject
to income tax examinations by major taxing authorities since inception. The Company&#8217;s effective tax rate was approximately <ix:nonFraction contextRef="c32" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:EffectiveIncomeTaxRateContinuingOperations" scale="-2" unitRef="pure" id="ixv-32346">18</ix:nonFraction>% and
<ix:nonFraction contextRef="c0" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:EffectiveIncomeTaxRateContinuingOperations" scale="-2" unitRef="pure" id="ixv-32347">21</ix:nonFraction>% for the three and nine months ended September 30, 2024, respectively.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation continuedAt="_IncomeTaxPolicyTextBlock-c0_cont_3" id="_IncomeTaxPolicyTextBlock-c0_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">FASB ASC&#160;740 prescribes a recognition threshold
and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in
a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing
authorities. There were no unrecognized tax benefits as of September 30, 2024 and December 31, 2023. The Company recognizes accrued interest
and penalties related to unrecognized tax benefits as income tax expense. No amounts were accrued for the payment of interest and penalties
at September 30, 2024 and December 31, 2023. The Company is currently not aware of any issues under review that could result in significant
payments, accruals, or material deviation from its position.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation id="_IncomeTaxPolicyTextBlock-c0_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Prior the closing of the Acquisition, the Predecessor
elected to be treated as a partnership for income tax purposes and was not subject to federal, state, or local income taxes. Any taxable
income or loss was recognized by the owners. Accordingly, no federal, state, or local income taxes have been reflected in the accompanying
consolidated financial statements of the Predecessor. Significant differences may exist between the results of operations reported in
these consolidated financial statements and those determined for income tax purposes primarily due to the use of different asset valuation
methods for tax purposes.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;&#160;</p>

<ix:nonNumeric contextRef="c0" continuedAt="_NewAccountingPronouncementsPolicyPolicyTextBlock-c0_cont_1" escape="true" name="us-gaap:NewAccountingPronouncementsPolicyPolicyTextBlock" id="ixv-27970"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Recent Accounting Pronouncements</i></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation continuedAt="_NewAccountingPronouncementsPolicyPolicyTextBlock-c0_cont_2" id="_NewAccountingPronouncementsPolicyPolicyTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In November 2023, the FASB issued Accounting Standards
Update (ASU) 2023-07,<i>&#160;Segment Reporting (Topic 280) &#8212; Improvements to Reportable Segment Disclosures</i>, which adds new
disclosure requirements related to significant segment expenses regularly provided to the chief operating decision maker (CODM) and included
in each reported measure of segment profit or loss, other segment items that constitute the difference between segment revenues less significant
segment expenses and the measure of profit or loss, disclosure of the CODM's title and position as well as an explanation of how the CODM
uses the reported measures and expanded interim disclosures. ASU 2023-07 is effective for financial statements for annual periods beginning
after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, and as a result, will require additional
segment expense disclosures when adopted in the Company's Form 10-K for the year ended December 31, 2024 and in periodic reports thereafter.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation continuedAt="_NewAccountingPronouncementsPolicyPolicyTextBlock-c0_cont_3" id="_NewAccountingPronouncementsPolicyPolicyTextBlock-c0_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In December 2023, the FASB issued ASU&#160;2023-09,<i>&#160;Income
Taxes (Topic 740) &#8212; Improvements to Income Tax Disclosures</i>. Under this ASU, entities must disclose, on an annual basis, specific
categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. In
addition, ASU&#160;2023-09&#160;requires entities to disclose additional information about income taxes paid. ASU&#160;2023-09&#160;is
effective for financial statements for annual periods beginning after December 15, 2024. The Company is currently evaluating the potential
impact of adopting this guidance on the consolidated financial statements and the notes to consolidated financial statements.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation id="_NewAccountingPronouncementsPolicyPolicyTextBlock-c0_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Other than described above, management does not
believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect
on the Company&#8217;s consolidated financial statements.</p></ix:continuation></ix:continuation><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><ix:nonNumeric contextRef="c0" continuedAt="_BusinessCombinationDisclosureTextBlock-c0_cont_1" escape="true" name="us-gaap:BusinessCombinationDisclosureTextBlock" id="ixv-28002"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>NOTE 3 &#8212; BUSINESS COMBINATION</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company entered into that certain Amended and Restated Membership
Interest Purchase Agreement, dated as of August 28, 2023 (as amended, the &#8220;MIPA&#8221;), by and among the Company, HNRA Upstream,
LLC, a newly formed Delaware limited liability company which is managed by, and is a subsidiary of, the Company (&#8220;OpCo&#8221;),
and HNRA Partner, Inc., a newly formed Delaware corporation and wholly owned subsidiary of OpCo (&#8220;SPAC Subsidiary&#8221;, and together
with the Company and OpCo, &#8220;Buyer&#8221; and each a &#8220;Buyer&#8221;), CIC Pogo LP, a Delaware limited partnership (&#8220;CIC&#8221;),
DenCo Resources, LLC, a Texas limited liability company (&#8220;DenCo&#8221;), Pogo Resources Management, LLC, a Texas limited liability
company (&#8220;Pogo Management&#8221;), 4400 Holdings, LLC, a Texas limited liability company (&#8220;4400&#8221; and, together with
CIC, DenCo and Pogo Management, collectively, &#8220;Seller&#8221; and each a &#8220;Seller&#8221;), and, solely with respect to Section
6.20 of the MIPA, the Sponsor.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On November 15, 2023 (the &#8220;Closing Date&#8221;),
as contemplated by the MIPA:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: top"> <td style="width: 0.25in; font-size: 10pt">&#160;</td> <td style="width: 0.25in; font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td> <td style="text-align: justify; font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The Company filed a Second Amended and Restated Certificate of Incorporation (the &#8220;Second A&amp;R Charter&#8221;) with the Secretary of State of the State of Delaware, pursuant to which the number of authorized shares of the Company&#8217;s capital stock, par value $<ix:nonFraction contextRef="c133" decimals="4" format="ixt:num-dot-decimal" name="us-gaap:BusinessAcquisitionSharePrice" scale="0" unitRef="usdPershares" id="ixv-32348">0.0001</ix:nonFraction> per share, was increased to <ix:nonFraction contextRef="c134" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:BusinessAcquisitionEquityInterestsIssuedOrIssuableNumberOfSharesIssued" scale="0" unitRef="shares" id="ixv-32349">121,000,000</ix:nonFraction> shares, consisting of (i) <ix:nonFraction contextRef="c135" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:BusinessAcquisitionEquityInterestsIssuedOrIssuableNumberOfSharesIssued" scale="0" unitRef="shares" id="ixv-32350">100,000,000</ix:nonFraction> shares of Class A common stock, par value $<ix:nonFraction contextRef="c136" decimals="4" format="ixt:num-dot-decimal" name="us-gaap:BusinessAcquisitionSharePrice" scale="0" unitRef="usdPershares" id="ixv-32351">0.0001</ix:nonFraction> per share (the &#8220;Class A Common Stock&#8221;), (ii) <ix:nonFraction contextRef="c137" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:BusinessAcquisitionEquityInterestsIssuedOrIssuableNumberOfSharesIssued" scale="0" unitRef="shares" id="ixv-32352">20,000,000</ix:nonFraction> shares of Class B common stock, par value $<ix:nonFraction contextRef="c138" decimals="4" format="ixt:num-dot-decimal" name="us-gaap:BusinessAcquisitionSharePrice" scale="0" unitRef="usdPershares" id="ixv-32353">0.0001</ix:nonFraction> per share (the &#8220;Class B Common Stock&#8221;), and (iii) <ix:nonFraction contextRef="c139" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:BusinessAcquisitionEquityInterestsIssuedOrIssuableNumberOfSharesIssued" scale="0" unitRef="shares" id="ixv-32354">1,000,000</ix:nonFraction> shares of preferred stock, par value $<ix:nonFraction contextRef="c140" decimals="4" format="ixt:num-dot-decimal" name="us-gaap:BusinessAcquisitionSharePrice" scale="0" unitRef="usdPershares" id="ixv-32355">0.0001</ix:nonFraction> per share;</span></td></tr> </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

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</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:continuation continuedAt="_BusinessCombinationDisclosureTextBlock-c0_cont_2" id="_BusinessCombinationDisclosureTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The &#8220;Aggregate Consideration&#8221; for the Pogo Business was
(a) cash in the amount of $<ix:nonFraction contextRef="c315" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:BusinessCombinationConsiderationTransferred1" scale="0" unitRef="usd" id="ixv-32363">31,074,127</ix:nonFraction> in immediately available funds (the &#8220;Cash Consideration&#8221;), (b) <ix:nonFraction contextRef="c316" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CommonUnitIssued" scale="0" unitRef="shares" id="ixv-32364">2,000,000</ix:nonFraction> Class B common
units of OpCo (&#8220;OpCo Class B Units&#8221;) (the &#8220;Common Unit Consideration&#8221;), which will be equal to and exchangeable
into <ix:nonFraction contextRef="c317" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CommonStockSharesIssued" scale="0" unitRef="shares" id="ixv-32365">2,000,000</ix:nonFraction>&#160;shares of Class A Common Stock issuable upon exercise of the OpCo Exchange Right (as defined below), as reflected
in the amended and restated limited liability company agreement of OpCo that became effective at Closing (the &#8220;A&amp;R OpCo LLC
Agreement&#8221;), (c) the <ix:nonFraction contextRef="c316" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CommonStockSharesIssued" scale="0" unitRef="shares" id="ixv-32366">2,000,000</ix:nonFraction> Seller Class B Shares, (d) $<ix:nonFraction contextRef="c318" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NotesPayable" scale="0" unitRef="usd" id="ixv-32367">15,000,000</ix:nonFraction> payable through a promissory note to Seller (the &#8220;Seller
Promissory Note&#8221;), (e) <ix:nonFraction contextRef="c319" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PreferredUnitsIssued" scale="0" unitRef="shares" id="ixv-32368">1,500,000</ix:nonFraction> preferred units of OpCo (the &#8220;OpCo Preferred Units&#8221; and together with the Opco Class
A Units and the OpCo Class B Units, the &#8220;OpCo Units&#8221;) of OpCo (the &#8220;Preferred Unit Consideration&#8221;, and, together
with the Common Unit Consideration, the &#8220;Unit Consideration&#8221;), and (f) an agreement to, on or before November 21, 2023, Buyer
to settle and pay to Seller $<ix:nonFraction contextRef="c320" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:SaleOfStockConsiderationReceivedOnTransaction" scale="0" unitRef="usd" id="ixv-32369">1,925,873</ix:nonFraction> from sales proceeds received from oil and gas production attributable to Pogo, including pursuant
to its third party contract with affiliates of Chevron. At Closing, <ix:nonFraction contextRef="c321" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:SaleOfStockNumberOfSharesIssuedInTransaction" scale="0" unitRef="shares" id="ixv-32370">500,000</ix:nonFraction> Seller Class B Shares (the &#8220;Escrowed Share Consideration&#8221;)
were placed in escrow for the benefit of Buyer pursuant to an escrow agreement and the indemnity provisions in the MIPA. The Aggregate
Consideration is subject to adjustment in accordance with the MIPA.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>OpCo A&amp;R LLC Agreement</i></b><i> </i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In connection with the Closing, the Company and Pogo Royalty, LLC,
a Texas limited liability company, an affiliate of Seller and Seller&#8217;s designated recipient of the Aggregate Consideration (&#8220;Pogo
Royalty&#8221;), entered into an amended and restated limited liability company agreement of OpCo (the &#8220;OpCo A&amp;R LLC Agreement&#8221;).
Pursuant to the A&amp;R OpCo LLC Agreement, each OpCo unitholder (excluding the Company) will, subject to certain timing procedures and
other conditions set forth therein, have the right(the &#8220;OpCo Exchange Right&#8221;) to exchange all or a portion of its OpCo Class
B Units for, at OpCo&#8217;s election,(i) shares of Class A Common Stock at an exchange ratio of <ix:nonFraction contextRef="c322" decimals="0" format="ixt-sec:numwordsen" name="hnra:ExchangeRatioShares" scale="0" unitRef="shares" id="ixv-32371">one</ix:nonFraction> share of Class A Common Stock for
each OpCo Class B Unit exchanged, subject to conversion rate adjustments for stock splits, stock dividends and reclassifications and other
similar transactions, or (ii) an equivalent amount of cash. Additionally, the holders of OpCo Class B Units will be required to exchange
all of their OpCo Class B Units (a &#8220;Mandatory Exchange&#8221;) upon the occurrence of the following: (i) upon the direction of the
Company with the consent of at least fifty percent (<ix:nonFraction contextRef="c323" decimals="2" format="ixt:num-dot-decimal" name="hnra:UnitsPercentage" scale="-2" unitRef="pure" id="ixv-32372">50</ix:nonFraction>%) of the holders of OpCo Class B Units; or (ii) upon the one-year anniversary of
the Mandatory Conversion Trigger Date. In connection with any exchange of OpCo Class B Units pursuant to the OpCo Exchange Right or acquisition
of OpCo Class B Units pursuant to a Mandatory Exchange, a corresponding number of shares of Class B Common Stock held by the relevant
OpCo unitholder will be cancelled.&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Immediately upon the Closing, Pogo Royalty exercised
the OpCo Exchange Right as it relates to <ix:nonFraction contextRef="c323" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:StockIssuedDuringPeriodSharesStockOptionsExercised" scale="0" unitRef="shares" id="ixv-32373">200,000</ix:nonFraction> OpCo Class B units (and <ix:nonFraction contextRef="c324" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:StockIssuedDuringPeriodSharesStockOptionsExercised" scale="0" unitRef="shares" id="ixv-32374">200,000</ix:nonFraction> shares of Class B Common Stock).</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The OpCo Preferred Units&#160;will be automatically
converted into OpCo Class&#160;B Units&#160;on the two-year anniversary of the issuance date of such OpCo Preferred Units&#160;(the &#8220;Mandatory
Conversion Trigger Date&#8221;) at a rate determined by dividing (i)&#160;$<ix:nonFraction contextRef="c319" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:SharesIssuedPricePerShare" scale="0" unitRef="usdPershares" id="ixv-32375">20.00</ix:nonFraction> per unit (the &#8220;Stated Conversion Value&#8221;),
by (ii)&#160;the Market Price of the Class&#160;A Common Stock, (the &#8220;Conversion Price&#8221;). The &#8220;Market Price&#8221; means
the simple average of the daily VWAP of the Class&#160;A Common Stock during the five (<ix:nonNumeric contextRef="c0" format="ixt-sec:durday" name="hnra:NumberofTradingDays" id="ixv-32376">5</ix:nonNumeric>)&#160;trading days prior to the date of conversion.
On the Mandatory Conversion Trigger Date, the Company will issue a number of shares of Class&#160;B Common Stock to Seller equivalent
to the number of OpCo Class&#160;B Units&#160;issued to Seller. If not exchanged sooner, such newly issued OpCo Class&#160;B Units&#160;shall
automatically exchange into Class&#160;A Common Stock on the one-year anniversary of the Mandatory Conversion Trigger Date at a ratio
of one OpCo Class&#160;B Unit for one share of Class&#160;Common Stock. An equivalent number of shares of Class&#160;B Common Stock must
be surrendered with the OpCo Class&#160;B Units&#160;to the Company in exchange for the Class&#160;A Common Stock. As noted above, the
OpCo Class B Units must be exchanged upon the one-year anniversary of the Mandatory Conversion Trigger Date.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p></ix:continuation><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><!-- Field: Page; Sequence: 192; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->50<!-- Field: /Sequence --></span></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt"></p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><ix:continuation continuedAt="_BusinessCombinationDisclosureTextBlock-c0_cont_3" id="_BusinessCombinationDisclosureTextBlock-c0_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Option Agreement</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In connection with the Closing, HNRA Royalties, LLC, a newly formed
Delaware limited liability company and wholly-owned subsidiary of the Company (&#8220;HNRA Royalties&#8221;) and Pogo Royalty entered
into an Option Agreement (the &#8220;Option Agreement&#8221;). Pogo Royalty owns certain overriding royalty interests in certain oil and
gas assets owned by Pogo Resources, LLC (the &#8220;ORR Interest&#8221;). Pursuant to the Option Agreement, Pogo Royalty granted irrevocable
and exclusive option to HNRA Royalties to purchase the ORR Interest for the Option Price (as defined below) at any time prior to November
15, 2024. The option is not exercisable while the Seller Promissory Note is outstanding.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The purchase price for the ORR Interest upon exercise
of the option is: (i)&#160;(1)&#160;$<ix:nonFraction contextRef="c325" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:StockIssuedDuringPeriodValueStockOptionsExercised" scale="0" unitRef="usd" id="ixv-32377">30,000,000</ix:nonFraction> the (&#8220;Base Option Price&#8221;), plus (2)&#160;an additional amount equal to interest
on the Base Option Price of twelve percent (<ix:nonFraction contextRef="c325" decimals="2" format="ixt:num-dot-decimal" name="hnra:PercentageOfBaseOptionPrice" scale="-2" unitRef="pure" id="ixv-32378">12</ix:nonFraction>%), compounded monthly, from the Closing Date through the date of acquisition of the ORR
Interest, minus (ii)&#160;any amounts received by Pogo Royalty in respect of the ORR Interest from the month of production in which the
effective date of the Option Agreement occurs through the date of the exercise of the option (such aggregate purchase price, the &#8220;Option
Price&#8221;).</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Option Agreement and the option will immediately
terminate upon the earlier of (a)&#160;Pogo Royalty&#8217;s transfer or assignment of all of the ORR Interest in accordance with the Option
Agreement and (b)&#160;November 15, 2024. As consideration for the Option Agreement, the Company issued <ix:nonFraction contextRef="c326" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:StockIssuedDuringPeriodSharesNewIssues" scale="0" unitRef="shares" id="ixv-32379">10,000</ix:nonFraction> shares of Class A common
stock to Pogo Royalty with a fair value of $<ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="hnra:PogoRoyaltyFairValue" scale="0" unitRef="usd" id="ixv-32380">67,700</ix:nonFraction>. Pogo Royalty obtained the ORR Interest effective July 1, 2023, when the Predecessor
transferred to Pogo Royalty an assigned and undivided royalty interest equal in amount to ten percent (<ix:nonFraction contextRef="c327" decimals="2" format="ixt:num-dot-decimal" name="hnra:PercentageOfPogoRoyalty" scale="-2" unitRef="pure" id="ixv-32381">10</ix:nonFraction>%) of the Predecessors&#8217;
interest all oil, gas and minerals in, under and produced from each lease. The Predecessor recognized a loss on sale of assets of $<ix:nonFraction contextRef="c34" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:GainLossOnDispositionOfAssets1" scale="0" sign="-" unitRef="usd" id="ixv-32382">816,011</ix:nonFraction>
in connection with this transaction.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Backstop Agreement</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In connection with the Closing, the Company entered a Backstop Agreement
(the &#8220;Backstop Agreement&#8221;) with Pogo Royalty and certain of the Company&#8217;s founders listed therein (the &#8220;Founders&#8221;)
whereby Pogo Royalty will have the right (&#8220;Put Right&#8221;) to cause the Founders to purchase Seller&#8217;s OpCo Preferred Units&#160;at
a purchase price per unit equal to $<ix:nonFraction contextRef="c328" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:SaleOfStockPricePerShare" scale="0" unitRef="usdPershares" id="ixv-32383">10.00</ix:nonFraction> per unit plus the product of (i)&#160;the number of&#160;days elapsed since the effective date
of the Backstop Agreement and (ii)&#160;$<ix:nonFraction contextRef="c114" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:SaleOfStockPricePerShare" scale="0" unitRef="usdPershares" id="ixv-32384">10.00</ix:nonFraction> divided by 730. Seller&#8217;s right to exercise the Put Right will survive for six (6)&#160;months
following the date the Trust Shares (as defined below) are not restricted from transfer under the Letter Agreement (as defined in the
MIPA) (the &#8220;Lockup Expiration Date&#8221;).</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As security that the Founders will be able to
purchase the OpCo Preferred Units&#160;upon exercise of the Put Right, the Founders agreed to place at least <ix:nonFraction contextRef="c329" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:StockIssuedDuringPeriodSharesStockOptionsExercised" scale="0" unitRef="shares" id="ixv-32385">1,300,000</ix:nonFraction>&#160;shares of
Class&#160;A Common Stock into escrow (the &#8220;Trust Shares&#8221;), which the Founders can sell or borrow against to meet their obligations
upon exercise of the Put Right, with the prior consent of Seller. The Company is not obligated to purchase the OpCo Preferred Units&#160;from
Pogo Royalty under the Backstop Agreement. Until the Backstop Agreement is terminated, Pogo Royalty and its affiliates are not permitted
to engage in any transaction which is designed to sell short the Class&#160;A Common Stock or any other publicly traded securities of
the Company.&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In connection with the Closing, the Company entered a Founder Pledge
Agreement (the &#8220;Founder Pledge Agreement&#8221;) with the Founders whereby, in consideration of placing the Trust Shares into escrow
and entering into the Backstop Agreement, the Company agreed: (a) by January 15, 2024, to issue to the Founders an aggregate number of
newly issued shares of Class A Common Stock equal to <ix:nonFraction contextRef="c330" decimals="0" format="ixt:num-dot-decimal" name="hnra:PercentageOfFounderShares" scale="0" unitRef="usdPeritem" id="ixv-32386">10</ix:nonFraction>% of the number of Trust Shares; (b) by January 15, 2024, to issue to the Founders
number of warrants to purchase an aggregate number of shares of Class A Common Stock equal to <ix:nonFraction contextRef="c331" decimals="0" format="ixt:num-dot-decimal" name="hnra:PercentageOfFounderShares" scale="0" unitRef="usdPeritem" id="ixv-32387">10</ix:nonFraction>% of the number of Trust Shares, which
such warrants shall be exercisable for <ix:nonNumeric contextRef="c332" format="ixt-sec:durwordsen" name="us-gaap:WarrantsAndRightsOutstandingTerm" id="ixv-32388">five years</ix:nonNumeric> from issuance at an exercise price of $<ix:nonFraction contextRef="c333" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:ClassOfWarrantOrRightExercisePriceOfWarrantsOrRights1" scale="0" unitRef="usdPershares" id="ixv-32389">11.50</ix:nonFraction> per shares; (c) if the Backstop Agreement
is not terminated prior to the Lockup Expiration Date, to issue an aggregate number of newly issued shares of Class A Common Stock equal
to&#160;(i) (A) the number of Trust Shares,&#160;<i>divided by&#160;</i>(B) the simple average of the daily VWAP of the Class A Common
Stock during the five (5) Trading Days prior to the date of the termination of the Backstop Agreement, subject to a minimum of $<ix:nonFraction contextRef="c0" decimals="2" format="ixt:num-dot-decimal" name="hnra:SubjecttoAMinimumShare" scale="0" unitRef="usdPershares" id="ixv-32390">6.50</ix:nonFraction> per
share,&#160;<i>multiplied by&#160;</i>(C) a price between $<ix:nonFraction contextRef="c334" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:BusinessAcquisitionSharePrice" scale="0" unitRef="usdPershares" id="ixv-32391">10.00</ix:nonFraction>-$<ix:nonFraction contextRef="c335" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:BusinessAcquisitionSharePrice" scale="0" unitRef="usdPershares" id="ixv-32392">13.00</ix:nonFraction> per share (as further described in the Founder Pledge Agreement),&#160;<i>minus&#160;</i>(ii)
the number of Trust Shares; and (d) following the purchase of&#160;OpCo Preferred Units by a Founder pursuant to the Put Right, to issue
a&#160;number of newly issued shares of Class A Common Stock equal to the number of Trust Shares sold by such Founder.&#160;Until the
Founder Pledge Agreement is terminated, the Founders are not permitted to engage in any transaction which is designed to sell short the
Class&#160;A Common Stock or any other publicly traded securities of the Company.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 193; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->51<!-- Field: /Sequence --></span></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt"></p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:continuation continuedAt="_BusinessCombinationDisclosureTextBlock-c0_cont_4" id="_BusinessCombinationDisclosureTextBlock-c0_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Acquisition was accounted for as a business
combination under ASC 805. The preliminary purchase price of the Pogo Business has been allocated to the assets acquired and liabilities
assumed based on their estimated relative fair values. The purchase price allocations herein are preliminary. The final purchase price
allocations for the Acquisition will be determined after completion of a thorough analysis to determine the fair value of all assets acquired
and liabilities assumed but in no event later than one year following the closing date of the Acquisition. Accordingly, the final acquisition
accounting adjustments could differ materially from the accounting adjustments included in these consolidated financial statements. <ix:nonNumeric contextRef="c0" continuedAt="_ScheduleOfRecognizedIdentifiedAssetsAcquiredAndLiabilitiesAssumedTableTextBlock-c0_cont_1" escape="true" name="us-gaap:ScheduleOfRecognizedIdentifiedAssetsAcquiredAndLiabilitiesAssumedTableTextBlock" id="ixv-32393">Any
increase or decrease in the fair value of the assets acquired and liabilities assumed, as compared to the information shown herein, could
also change the portion of purchase price allocable to goodwill and could impact the operating results of the Company following the Acquisition
due to differences in purchase price allocation, depreciation and amortization related to some of these assets and liabilities.</ix:nonNumeric></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation id="_ScheduleOfRecognizedIdentifiedAssetsAcquiredAndLiabilitiesAssumedTableTextBlock-c0_cont_1"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="font-weight: bold">Purchase Price:</td><td>&#160;</td>
    <td colspan="2" style="text-align: right">&#160;</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 88%">Cash</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right"><ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PaymentsToAcquireBusinessesGross" scale="0" unitRef="usd" id="ixv-32394">31,074,127</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">Side Letter payable</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:BusinessCombinationConsiderationTransferredOther1" scale="0" unitRef="usd" id="ixv-32395">1,925,873</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Promissory note to Sellers of Pogo Business</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:BusinessCombinationConsiderationTransferredLiabilitiesIncurred" scale="0" unitRef="usd" id="ixv-32396">15,000,000</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left"><ix:nonFraction contextRef="c337" decimals="INF" format="ixt:num-dot-decimal" name="us-gaap:BusinessAcquisitionEquityInterestsIssuedOrIssuableNumberOfSharesIssued" scale="0" unitRef="shares" id="ixv-32397">10,000</ix:nonFraction> Company Class A Common shares for Option Agreement</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c337" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:BusinessCombinationConsiderationTransferredEquityInterestsIssuedAndIssuable" scale="0" unitRef="usd" id="ixv-32398">67,700</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left"><ix:nonFraction contextRef="c338" decimals="INF" format="ixt:num-dot-decimal" name="us-gaap:BusinessAcquisitionEquityInterestsIssuedOrIssuableNumberOfSharesIssued" scale="0" unitRef="shares" id="ixv-32399">200,000</ix:nonFraction> Company Class A Common shares</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c338" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:BusinessCombinationConsiderationTransferredEquityInterestsIssuedAndIssuable" scale="0" unitRef="usd" id="ixv-32400">1,354,000</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
    <td>Purchase Price Allocation</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="hnra:BusinessCombinationRecognizedIdentifiableAssetsAcquiredAndLiabilitiesAssumedShorttermDerivativeLiabilities" scale="0" unitRef="usd" id="ixv-32415">27,569</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 9pt">Deferred tax liabilities</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:BusinessCombinationRecognizedIdentifiableAssetsAcquiredAndLiabilitiesAssumedDeferredTaxLiabilities" scale="0" unitRef="usd" id="ixv-32416">8,528,772</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="hnra:BusinessCombinationRecognizedIdentifiableAssetsAcquiredAndLiabilitiesAssumedAssetRetirementObligationsNet" scale="0" unitRef="usd" id="ixv-32417">893,235</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="hnra:BusinessCombinationRecognizedIdentifiableAssetsAcquiredAndLiabilitiesAssumedOtherLiabilities" scale="0" unitRef="usd" id="ixv-32418">675,000</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
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  </table></ix:continuation>


<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As of September 30, 2024, the Company owes $<ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OtherLiabilitiesCurrent" scale="0" unitRef="usd" id="ixv-32420">645,873</ix:nonFraction>
of the Side Letter payable, included in accrued expenses and other current liabilities on the consolidated balance sheet.&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Effective June 20, 2024, the Company and the Seller entered into a
settlement agreement and Release (the &#8220;Settlement Agreement&#8221;). Under the Settlement Agreement, and in settlement of the working
capital provisions of the Amended MIPA, the Seller agreed to waive all rights and claims to the amount of royalties payable under the
ORRI as of December 31, 2023, totaling $<ix:nonFraction contextRef="c115" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PaymentsForRoyalties" scale="0" unitRef="usd" id="ixv-32421">1,500,000</ix:nonFraction> and agreed to pay certain amounts related to vendor payable claims assumed by the Company
at Closing totaling $<span style="-sec-ix-hidden: hidden-fact-253">220,00</span>. During the nine months ended September 30, 2024, the Company recognized a gain on settlement of liabilities
of $<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:GainLossRelatedToLitigationSettlement" scale="0" unitRef="usd" id="ixv-32422">1,720,000</ix:nonFraction> related to the Settlement Agreement, included in other income on the unaudited consolidated statement of operations.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p></ix:continuation><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: -0.5pt"></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><b>&#160;</b></p><ix:continuation id="_BusinessCombinationDisclosureTextBlock-c0_cont_4"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: -0.5pt"><b><i>Unaudited Pro Forma
Financial Information</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: -0.5pt; "><b>&#160;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">The following table sets
forth the pro-forma consolidated results of operations of the combined Successor Predecessor companies for the three and nine months ended
September 30, 2023 as if the Acquisition occurred on January 1, 2023. <ix:nonNumeric contextRef="c0" continuedAt="_BusinessAcquisitionProFormaInformationTextBlock-c0_cont_1" escape="true" name="us-gaap:BusinessAcquisitionProFormaInformationTextBlock" id="ixv-32423">The pro forma results of operations are presented for informational
purposes only and are not indicative of the results of operations that would have been achieved if the acquisitions had taken place on
the dates noted above, or of results that may occur in the future.</ix:nonNumeric></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<ix:continuation id="_BusinessAcquisitionProFormaInformationTextBlock-c0_cont_1"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="white-space: nowrap">&#160;</td><td style="white-space: nowrap; font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="white-space: nowrap; border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Three Months<br/> ended<br/> September 30, <br/>
2023</td><td style="white-space: nowrap; padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="white-space: nowrap; font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="white-space: nowrap; border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Nine Months <br/> ended<br/> September 30, <br/>
2023</td><td style="white-space: nowrap; padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 76%; text-align: justify">Revenue</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right"><ix:nonFraction contextRef="c33" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:BusinessAcquisitionsProFormaRevenue" scale="0" unitRef="usd" id="ixv-32424">4,621,375</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right"><ix:nonFraction contextRef="c34" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:BusinessAcquisitionsProFormaRevenue" scale="0" unitRef="usd" id="ixv-32425">17,883,362</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: justify">Operating income (loss)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c33" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:BusinessAcquisitionsProFormaIncomeLossFromContinuingOperationsBeforeChangesInAccountingAndExtraordinaryItemsNetOfTax" scale="0" sign="-" unitRef="usd" id="ixv-32426">1,058,877</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c34" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:BusinessAcquisitionsProFormaIncomeLossFromContinuingOperationsBeforeChangesInAccountingAndExtraordinaryItemsNetOfTax" scale="0" unitRef="usd" id="ixv-32427">637,518</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: justify">Net income (loss)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c33" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:BusinessAcquisitionsProFormaNetIncomeLoss" scale="0" sign="-" unitRef="usd" id="ixv-32428">3,617,495</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c34" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:BusinessAcquisitionsProFormaNetIncomeLoss" scale="0" sign="-" unitRef="usd" id="ixv-32429">5,654,484</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: justify">Net income (loss) per common share</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">(<ix:nonFraction contextRef="c33" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:BusinessAcquisitionProFormaEarningsPerShareBasic" scale="0" sign="-" unitRef="usdPershares" id="ixv-32430">0.70</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c34" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:BusinessAcquisitionProFormaEarningsPerShareBasic" scale="0" sign="-" unitRef="usdPershares" id="ixv-32431">1.10</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: justify">Weighted Average common shares outstanding</td><td>&#160;</td>
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  </table></ix:continuation></ix:continuation><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><b>&#160;</b></p><div>

</div><ix:nonNumeric contextRef="c0" continuedAt="_DerivativesAndFairValueTextBlock-c0_cont_1" escape="true" name="us-gaap:DerivativesAndFairValueTextBlock" id="ixv-28391"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><ix:nonNumeric contextRef="c0" continuedAt="_ScheduleOfDerivativeInstrumentsIncludedInTradingActivitiesTextBlock-c0_cont_1" escape="true" name="us-gaap:ScheduleOfDerivativeInstrumentsIncludedInTradingActivitiesTextBlock" id="ixv-32434">The following table sets
forth the derivative volumes by period as of September 30, 2024 for the Company:</ix:nonNumeric></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; ">&#160;</p>

<ix:continuation continuedAt="_ScheduleOfDerivativeInstrumentsIncludedInTradingActivitiesTextBlock-c0_cont_2" id="_ScheduleOfDerivativeInstrumentsIncludedInTradingActivitiesTextBlock-c0_cont_1"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom">
    <td style="font-weight: bold; border-bottom: Black 1.5pt solid">Period</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; "><b>&#160;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><i>Crude price differential
swaps</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">During the year ended
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price fluctuations. <ix:continuation continuedAt="_ScheduleOfDerivativeInstrumentsIncludedInTradingActivitiesTextBlock-c0_cont_3" id="_ScheduleOfDerivativeInstrumentsIncludedInTradingActivitiesTextBlock-c0_cont_2">The following table reflects the weighted-average price of open commodity swap contracts as of September 30, 2024:</ix:continuation></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<ix:continuation id="_ScheduleOfDerivativeInstrumentsIncludedInTradingActivitiesTextBlock-c0_cont_3"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; "></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; ">&#160;</p><div>

</div><ix:continuation id="_DerivativesAndFairValueTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; "><b>Derivative Assets and Liabilities</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">As of September 30, 2024
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bank credit facility. The Company believes the counterparty is acceptable credit risk, and the credit worthiness of the counterparty is
subject to periodic review. The assets and liabilities are netted given that all positions are held by a single counterparty and subject
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<ix:continuation continuedAt="_ScheduleOfDerivativeAssetsAtFairValueTableTextBlock-c0_cont_2" id="_ScheduleOfDerivativeAssetsAtFairValueTableTextBlock-c0_cont_1"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt; text-align: right"><div style="-sec-ix-hidden: hidden-fact-256">&#8212;</div></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt; text-align: right">&#160;</td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<ix:continuation id="_ScheduleOfDerivativeAssetsAtFairValueTableTextBlock-c0_cont_2"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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    <td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt; text-align: right">&#160;</td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
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  </table></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; "><ix:nonNumeric contextRef="c0" continuedAt="_ScheduleOfDerivativesInstrumentsStatementsOfFinancialPerformanceAndFinancialPositionLocationTableTextBlock-c0_cont_1" escape="true" name="us-gaap:ScheduleOfDerivativesInstrumentsStatementsOfFinancialPerformanceAndFinancialPositionLocationTableTextBlock" id="ixv-32461">The effects of the Company&#8217;s derivatives
on the consolidated statements of operations are summarized below:</ix:nonNumeric></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; ">&#160;</p>

<ix:continuation id="_ScheduleOfDerivativesInstrumentsStatementsOfFinancialPerformanceAndFinancialPositionLocationTableTextBlock-c0_cont_1"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="white-space: nowrap">&#160;</td><td style="white-space: nowrap; font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; font-style: italic">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 52%; text-align: left">Total gain&#160;(loss) on unsettled derivatives</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right"><ix:nonFraction contextRef="c353" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:GainLossOnDerivativeInstrumentsNetPretax" scale="0" unitRef="usd" id="ixv-32462">2,008,631</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right"><ix:nonFraction contextRef="c354" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:GainLossOnDerivativeInstrumentsNetPretax" scale="0" unitRef="usd" id="ixv-32463">326,508</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td><td style="border-left: Black 1.5pt solid; width: 1%">&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-bottom: 1.5pt">Total gain (loss) on settled derivatives</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction contextRef="c353" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:RealizedGainLossInvestmentAndDerivativeOperatingAfterTax" scale="0" sign="-" unitRef="usd" id="ixv-32466">107,969</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction contextRef="c354" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:RealizedGainLossInvestmentAndDerivativeOperatingAfterTax" scale="0" sign="-" unitRef="usd" id="ixv-32467">506,571</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="border-left: Black 1.5pt solid; padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction contextRef="c355" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:RealizedGainLossInvestmentAndDerivativeOperatingAfterTax" scale="0" sign="-" unitRef="usd" id="ixv-32468">600,740</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction contextRef="c356" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:RealizedGainLossInvestmentAndDerivativeOperatingAfterTax" scale="0" sign="-" unitRef="usd" id="ixv-32469">899,395</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 2.5pt">Net gain (loss) on derivatives</td><td style="padding-bottom: 2.5pt">&#160;</td>
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    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">(<ix:nonFraction contextRef="c354" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DerivativeGainLossOnDerivativeNet" scale="0" sign="-" unitRef="usd" id="ixv-32471">180,063</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">)</td><td style="border-left: Black 1.5pt solid; padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">(<ix:nonFraction contextRef="c355" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DerivativeGainLossOnDerivativeNet" scale="0" sign="-" unitRef="usd" id="ixv-32472">1,436,100</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">)</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">(<ix:nonFraction contextRef="c356" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DerivativeGainLossOnDerivativeNet" scale="0" sign="-" unitRef="usd" id="ixv-32473">673,057</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">)</td></tr>
  </table></ix:continuation></ix:continuation><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; ">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; "></p><div>

</div><!-- Field: Page; Sequence: 196; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->54<!-- Field: /Sequence --></span></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt"></p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; ">&#160;</p><div>

</div><ix:nonNumeric contextRef="c0" continuedAt="_LongTermDebtTextBlock-c0_cont_1" escape="true" name="us-gaap:LongTermDebtTextBlock" id="ixv-28862"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>NOTE 5&#8239;&#8212;&#8239;LONG-TERM DEBT AND
NOTES PAYABLE</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><ix:nonNumeric contextRef="c0" continuedAt="_ScheduleOfDebtInstrumentsTextBlock-c0_cont_1" escape="true" name="us-gaap:ScheduleOfDebtInstrumentsTextBlock" id="ixv-32474">The Company&#8217;s debt instruments are as follows:</ix:nonNumeric></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation id="_ScheduleOfDebtInstrumentsTextBlock-c0_cont_1"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="white-space: nowrap">&#160;</td><td style="white-space: nowrap; font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="white-space: nowrap; font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">September 30,<br/> 2024</td><td style="white-space: nowrap; padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="white-space: nowrap; font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 76%; text-align: left">Senior Secured Term Loan</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right"><ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:SecuredDebt" scale="0" unitRef="usd" id="ixv-32475">24,735,391</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right"><ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:SecuredDebt" scale="0" unitRef="usd" id="ixv-32476">27,680,703</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">Seller Promissory Note</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NotesPayable" scale="0" unitRef="usd" id="ixv-32477">15,000,000</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NotesPayable" scale="0" unitRef="usd" id="ixv-32478">15,000,000</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Merchant Cash Advances</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="hnra:MerchantCashAdvances" scale="0" unitRef="usd" id="ixv-32479">1,019,037</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-263">-</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-bottom: 1.5pt">Private loans</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="hnra:PrivateLoans" scale="0" unitRef="usd" id="ixv-32480">3,875,750</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="hnra:PrivateLoans" scale="0" unitRef="usd" id="ixv-32481">3,469,500</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>Total</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:LongTermDebt" scale="0" unitRef="usd" id="ixv-32483">46,150,203</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">Less: unamortized financing cost</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:UnamortizedDebtIssuanceExpense" scale="0" unitRef="usd" id="ixv-32484">1,046,837</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:UnamortizedDebtIssuanceExpense" scale="0" unitRef="usd" id="ixv-32485">2,147,346</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt">Less: current portion including amortization</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentUnamortizedDiscount" scale="0" unitRef="usd" id="ixv-32486">14,743,263</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentUnamortizedDiscount" scale="0" unitRef="usd" id="ixv-32487">6,516,651</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-bottom: 4pt; padding-left: 9pt">Long-term debt, net of current portion</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:LongTermDebtNoncurrent" scale="0" unitRef="usd" id="ixv-32488">28,840,078</ix:nonFraction></td><td style="padding-bottom: 4pt; text-align: left">&#160;</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:LongTermDebtNoncurrent" scale="0" unitRef="usd" id="ixv-32489">37,486,206</ix:nonFraction></td><td style="padding-bottom: 4pt; text-align: left">&#160;</td></tr>
  </table></ix:continuation>


<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; "><b>Senior Secured Term Loan Agreement</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">In connection with the Closing, the Company (for purposes of the Loan
Agreement, the &#8220;Borrower&#8221;) and First International Bank &amp; Trust&#160;(&#8220;FIBT&#8221; or &#8220;Lender&#8221;), OpCo,
SPAC Subsidiary, Pogo, and LH Operating, LLC (for purposes of the Loan Agreement, collectively, the &#8220;Guarantors&#8221; and together
with the Borrower, the &#8220;Loan Parties&#8221;), and FIBT entered into a Senior Secured Term Loan Agreement on November 15, 2023 (the
&#8220;Loan Agreement&#8221;), setting forth the terms of a senior secured term loan facility in an aggregate principal amount of $<ix:nonFraction contextRef="c357" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentFaceAmount" scale="0" unitRef="usd" id="ixv-32490">28,000,000</ix:nonFraction>
(the &#8220;Term Loan&#8221;).</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">Pursuant to the terms
of the Term Loan Agreement, the Term Loan was advanced in one tranche on the Closing Date. The proceeds of the Term Loan were used to
(a) fund a portion of the purchase price, (b)&#160;partially fund a debt service reserve account funded with $<ix:nonFraction contextRef="c358" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProceedsFromLoans" scale="0" unitRef="usd" id="ixv-32491">2,600,000</ix:nonFraction> at the Closing
Date, (c) pay fees and expenses in connection with the purchase and the closing of the Term Loan and (e) other general corporate purposes.
The Term Loan accrues interest at a per annum rate equal to the FIBT prime rate plus <ix:nonFraction contextRef="c359" decimals="3" format="ixt:num-dot-decimal" name="us-gaap:DerivativeVariableInterestRate" scale="-2" unitRef="pure" id="ixv-32492">6.5</ix:nonFraction>% and fully matures on the third anniversary of
the Closing Date&#160;(&#8220;Maturity Date&#8221;). <ix:nonNumeric contextRef="c360" name="us-gaap:DebtInstrumentPaymentTerms" id="ixv-28968">Payments of principal and interest will be due on the 15<sup>th</sup>&#160;day of
each calendar month, beginning December 15, 2023, each in an amount equal to the Monthly Payment Amount (as defined in the Term Loan Agreement),
except that the principal and interest payment due on the Maturity Date will be in the amount of the entire remaining principal amount
of the Term Loan and all accrued but unpaid interest then outstanding. An additional one-time payment of principal is due on the date
the annual financial report for the year ending December 31, 2024, is due to be delivered by Borrower to Lender in an amount that Excess
Cash Flow (as defined in the Term Loan Agreement) exceeds the Debt Service Coverage Ratio (as defined in the Term Loan Agreement) of 1.35x
as of the end of such quarter; provided that in no event shall the amount of the payment exceed $5,000,000.</ix:nonNumeric></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><ix:nonNumeric contextRef="c360" name="us-gaap:DebtInstrumentIssuer" id="ixv-32493">The Borrower may elect
to prepay all or a portion greater than $1,000,000 of the amounts owed prior to the Maturity Date. In addition to the foregoing, the Borrower
is required to prepay the Term Loan with the net cash proceeds of certain dispositions and upon the decrease in value of collateral.</ix:nonNumeric></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">On the Closing Date,
Borrower deposited $<ix:nonFraction contextRef="c361" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DepositsPaidForSecuritiesBorrowedAtCarryingValue" scale="0" unitRef="usd" id="ixv-32494">2,600,000</ix:nonFraction> into a Debt Service Reserve Account (the &#8220;Debt Service Reserve Account&#8221;) and, within 60 days
following the Closing Date, Borrower must deposit such additional amounts such that the balance of the Debt Service Reserve Account is
equal to $<ix:nonFraction contextRef="c359" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DepositsPaidForSecuritiesBorrowedAtCarryingValue" scale="0" unitRef="usd" id="ixv-32495">5,000,000</ix:nonFraction> at all times.&#160;The Debt Service Reserve Account may be used by Lender at any time and from time to time, in Lender&#8217;s
sole discretion, to pay (or to supplement Borrower&#8217;s payments of) the obligations due under the Term Loan Agreement. &#160;As of
March 31, 2024, the Company was not in compliance with the Debt Service Reserve Account balance. <span>On
April 18, 2024, the Company and FIBT entered into a Second Amendment to Term Loan Agreement (the &#8220;Amendment&#8221;) effective as
of March 31, 2024. Pursuant to the Amendment, the Term Loan Agreement was modified to provide that the Company must, on or before December
31, 2024, deposit funds in a Debt Service Reserve Account (as defined in the Loan Agreement) such that the balance of the account equals
$<ix:nonFraction contextRef="c362" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:Deposits" scale="0" unitRef="usd" id="ixv-32496">5,000,000</ix:nonFraction> and FIBT waived the provision that such amount had to be deposited within 60 days of the closing date of the Loan Agreement.
In addition, the Amendment provides that, if at any time prior to December 31, 2024, the Company or any of its affiliates enter into a
sale leaseback transaction with respect to any of its equipment, the Company will deposit an amount equal to the greater of (A) $<ix:nonFraction contextRef="c359" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:Deposits" scale="0" unitRef="usd" id="ixv-32497">500,000</ix:nonFraction>
or (B) <ix:nonFraction contextRef="c359" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:LongTermDebtPercentageBearingFixedInterestRate" scale="-2" unitRef="pure" id="ixv-32498">10</ix:nonFraction>% of the proceeds of such transaction into the Debt Service Reserve Account on the effective date of such sale and leaseback
transaction.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;&#160;</p></ix:nonNumeric><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "></p><div>

</div><!-- Field: Page; Sequence: 197; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->55<!-- Field: /Sequence --></span></p></div><div>
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    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p><div>

</div><ix:continuation continuedAt="_LongTermDebtTextBlock-c0_cont_2" id="_LongTermDebtTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">The Term Loan Agreement
contains affirmative and restrictive covenants and representations and warranties. The Loan Parties are bound by certain affirmative covenants
setting forth actions that are required during the term of the Term Loan Agreement, including, without limitation, certain information
delivery requirements, obligations to maintain certain insurance, and certain notice requirements. Additionally, the Loan Parties from
time to time will be bound by certain restrictive covenants setting forth actions that are not permitted to be taken during the term of
the Term Loan Agreement without prior written consent, including, without limitation, incurring certain additional indebtedness, entering
into certain hedging contracts, consummating certain mergers, acquisitions or other business combination transactions, consummating certain
dispositions of assets, making certain payments on subordinated debt, making certain investments, entering into certain transactions with
affiliates, and incurring any non-permitted lien or other encumbrance on assets. The Term Loan Agreement also contains other customary
provisions, such as confidentiality obligations and indemnification rights for the benefit of the Lender. The Company was in compliance
with covenants of the Term Loan Agreement as of September 30, 2024.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">For the nine months ended
September 30, 2024, the Company amortized $<ix:nonFraction contextRef="c358" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:InterestExpenseDebt" scale="0" unitRef="usd" id="ixv-32499">295,474</ix:nonFraction> to interest expense related to deferred finance costs on the Term Loan Agreement. As
of September 30, 2024, the principal balance on the Term Loan was <ix:nonNumeric contextRef="c358" name="us-gaap:LongTermDebtContingentPaymentOfPrincipalOrInterest" id="ixv-32500">$24,735,391</ix:nonNumeric>, unamortized financing costs was&#160;$<ix:nonFraction contextRef="c363" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentUnamortizedDiscount" scale="0" unitRef="usd" id="ixv-32501">741,421</ix:nonFraction> and accrued
interest was $<ix:nonFraction contextRef="c364" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentIncreaseAccruedInterest" scale="0" unitRef="usd" id="ixv-32502">177,829</ix:nonFraction>. As of December 31, 2023, the principal balance on the Term Loan was $<ix:nonFraction contextRef="c365" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:LongTermDebt" scale="0" unitRef="usd" id="ixv-32503">27,680,703</ix:nonFraction>, unamortized financing costs was&#160;$<ix:nonFraction contextRef="c366" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentUnamortizedDiscount" scale="0" unitRef="usd" id="ixv-32504">1,036,895</ix:nonFraction>
and accrued interest was $<ix:nonFraction contextRef="c367" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentIncreaseAccruedInterest" scale="0" unitRef="usd" id="ixv-32505">173,004</ix:nonFraction>.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; "><i>Pledge and Security Agreement</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">In connection with the
Term Loan, FIBT and the Loan Parties&#160;entered into a Pledge and Security Agreement on November 15, 2023 (the &#8220;Security Agreement&#8221;),
whereby the Loan Parties granted a senior security interest to FIBT on all assets of the Loan Parties, except certain excluded assets
described therein, including, among other things, any interests in the ORR Interest.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; "><i>Guaranty Agreement</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">In connection with the
Term Loan, FIBT and the Loan Parties&#160;entered into a Guaranty Agreement on November 15, 2023 (the &#8220;Guaranty Agreement&#8221;),
whereby the Guarantors guaranteed payment and performance of all Loan Parties under the Term Loan Agreement.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><i>Subordination Agreement</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">In connection with the
Term Loan and the Seller Promissory Note, the Lenders, the Sellers and the Company entered into a Subordination Agreement whereby the
Sellers cannot require repayment, nor commence any action or proceeding at law or equity against the Company or the Lenders to recover
any or all of the unpaid Seller Promissory Note until the Term Loan is repaid in full.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><b>Seller Promissory
Note</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><b>&#160;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In connection with the Closing, OpCo issued the
Seller Promissory Note to Pogo Royalty in the principal amount of $<ix:nonFraction contextRef="c368" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentAnnualPrincipalPayment" scale="0" unitRef="usd" id="ixv-32506">15,000,000</ix:nonFraction>. The Seller Promissory Note matures on May 15, 2024, bears
an interest rate equal <ix:nonFraction contextRef="c369" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentInterestRateEffectivePercentage" scale="-2" unitRef="pure" id="ixv-32507">12</ix:nonFraction>% per annum, and contains no penalty for prepayment. As the Seller Promissory Note was not repaid in full prior
to its stated maturity date, OpCo will owe interest from and after default equal to the lesser of <ix:nonFraction contextRef="c370" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:DerivativeVariableInterestRate" scale="-2" unitRef="pure" id="ixv-32508">18</ix:nonFraction>% per annum and the highest amount
permissible under law, compounded monthly. The Seller Promissory Note is subordinated to the Term Loan as discussed above. Accrued interest
on the Seller Promissory Note was $<ix:nonFraction contextRef="c371" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentIncreaseAccruedInterest" scale="0" unitRef="usd" id="ixv-32509">2,293,767</ix:nonFraction> and $<ix:nonFraction contextRef="c372" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentIncreaseAccruedInterest" scale="0" unitRef="usd" id="ixv-32510">277,397</ix:nonFraction> as of September 30, 2024 and December 31, 2023, respectively. As a result of
the Subordination Agreement, the Company has classified the Seller Promissory Note as a long-term liability on the consolidated balance
sheet.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p></ix:continuation><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt"></p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:continuation id="_LongTermDebtTextBlock-c0_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Private Notes Payable</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Prior to December 31, 2023, the Company entered
into various unsecured promissory notes with existing investors of the Company for total principal of $<ix:nonFraction contextRef="c373" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentAnnualPrincipalPayment" scale="0" unitRef="usd" id="ixv-32511">5,434,000</ix:nonFraction> (the &#8220;Private Notes
Payable&#8221;). The Private Notes Payable bear interest at the greater of <ix:nonFraction contextRef="c373" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentInterestRateEffectivePercentage" scale="-2" unitRef="pure" id="ixv-32512">15</ix:nonFraction>% or the highest rate allowed under law, and have a stated
maturity date of the five-year anniversary of the closing of the MIPA. The investors may demand repayment beginning six months after the
closing of the MIPA. The investors also received common stock warrants equal to the principal amount funded. Each warrant entitles the
holder to purchase three quarters of one share of common stock at a price of $<ix:nonFraction contextRef="c374" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:ClassOfWarrantOrRightExercisePriceOfWarrantsOrRights1" scale="0" unitRef="usdPershares" id="ixv-32513">11.50</ix:nonFraction>. Each warrant will become exercisable on the closing
date of the MIPA and is exercisable through the five-year anniversary of the promissory note agreement date. The warrants also grant the
holder a one-time redemption right to require the Company pay the holder in cash equal to $<ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ClassOfWarrantOrRightExercisePriceOfWarrantsOrRights1" scale="0" unitRef="usdPershares" id="ixv-32514">1</ix:nonFraction> per warrant 18 months following the closing
of the MIPA, or May 15, 2025. Based on the redemption right present in these warrants, the warrants are accounted for as a liability in
accordance with ASC 480 and ASC 815 and a debt discount on the Private Notes Payable, with the changes in fair value of the warrants recognize
in the statement of operations.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">During the nine months
ended September 30, 2024, the Company received an additional $<ix:nonFraction contextRef="c375" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CashAcquiredInExcessOfPaymentsToAcquireBusiness" scale="0" unitRef="usd" id="ixv-32515">450,000</ix:nonFraction>&#160;in cash proceeds under unsecured promissory notes with investors
with the same terms as those described above. The Company issued an additional&#160;<ix:nonFraction contextRef="c375" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProceedsFromIssuanceOfWarrants" scale="0" unitRef="usd" id="ixv-32516">450,000</ix:nonFraction>&#160;warrants with an exercise price of $<ix:nonFraction contextRef="c376" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:ClassOfWarrantOrRightExercisePriceOfWarrantsOrRights1" scale="0" unitRef="usdPershares" id="ixv-32517">11.50</ix:nonFraction>&#160;to
these investors in connection with the agreements.&#160;There are a total of <ix:nonFraction contextRef="c376" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ClassOfWarrantOrRightNumberOfSecuritiesCalledByWarrantsOrRights" scale="0" unitRef="shares" id="ixv-32518">5,884,000</ix:nonFraction> warrants issued to these investors.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company is amortizing the debt discount through
a period of nine months from the Closing Date. The Company recognized amortization of debt discount of $<ix:nonFraction contextRef="c377" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentUnamortizedDiscount" scale="0" unitRef="usd" id="ixv-32519">1,472,012</ix:nonFraction> during the nine months
ended September 30, 2024. Accrued interest on the promissory notes was $<ix:nonFraction contextRef="c378" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentIncreaseAccruedInterest" scale="0" unitRef="usd" id="ixv-32520">143,463</ix:nonFraction> and $<ix:nonFraction contextRef="c379" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentIncreaseAccruedInterest" scale="0" unitRef="usd" id="ixv-32521">158,801</ix:nonFraction> as of September 30, 2024 and December 31,
2023, respectively.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Merchant Cash Advances</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On July 1, 2024, the Company entered into a merchant
cash advance agreement with a third party. The Company borrowed $<ix:nonFraction contextRef="c380" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentFaceAmount" scale="0" unitRef="usd" id="ixv-32522">525,000</ix:nonFraction> and received $<ix:nonFraction contextRef="c381" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProceedsFromRelatedPartyDebt" scale="0" unitRef="usd" id="ixv-32523">500,000</ix:nonFraction> in cash proceeds. The Company will repay
an aggregate of $<ix:nonFraction contextRef="c381" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:RepaymentsOfRelatedPartyDebt" scale="0" unitRef="usd" id="ixv-32524">756,000</ix:nonFraction> on a weekly basis through <ix:nonNumeric contextRef="c382" name="us-gaap:LongTermDebtDescription" id="ixv-32525">March 2025</ix:nonNumeric>. The difference between the proceeds received and the total repayment was
recognized as debt discount, and is amortized through the maturity date. As of September 30, 2024, the remaining balance owed on this
advance was $<ix:nonFraction contextRef="c380" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:LongTermDebt" scale="0" unitRef="usd" id="ixv-32526">548,100</ix:nonFraction>.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On July 15, 2024, the Company entered into a subordinated
business loan and security agreement with a third party. The Company received cash proceeds of $<ix:nonFraction contextRef="c383" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProceedsFromRelatedPartyDebt" scale="0" unitRef="usd" id="ixv-32527">500,000</ix:nonFraction>, and will repay an aggregate of
$<ix:nonFraction contextRef="c383" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:RepaymentsOfRelatedPartyDebt" scale="0" unitRef="usd" id="ixv-32528">685,000</ix:nonFraction> to the lender on a weekly basis through <ix:nonNumeric contextRef="c384" name="us-gaap:LongTermDebtDescription" id="ixv-32529">February 2025</ix:nonNumeric>. As of September 30, 2024, the remaining balance owed on this advance was
$<ix:nonFraction contextRef="c385" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:LongTermDebt" scale="0" unitRef="usd" id="ixv-32530">470,937</ix:nonFraction>.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As of September 30, 2024, there was $<ix:nonFraction contextRef="c386" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentUnamortizedDiscount" scale="0" unitRef="usd" id="ixv-32531">294,133</ix:nonFraction> of
unamortized discount related to the merchant cash advances, and the Company recognized $<ix:nonFraction contextRef="c387" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AmortizationOfFinancingCostsAndDiscounts" scale="0" unitRef="usd" id="ixv-32532">179,367</ix:nonFraction> of amortization of debt discount related
to the advances.&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Future Maturities of Long-term debt</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><ix:nonNumeric contextRef="c0" continuedAt="_ScheduleOfMaturitiesOfLongTermDebtTableTextBlock-c0_cont_1" escape="true" name="us-gaap:ScheduleOfMaturitiesOfLongTermDebtTableTextBlock" id="ixv-32533">The following summarizes the Company&#8217;s maturities
of debt instruments:</ix:nonNumeric></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation id="_ScheduleOfMaturitiesOfLongTermDebtTableTextBlock-c0_cont_1"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Principal</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>Twelve Months Ended:</td><td>&#160;</td>
    <td colspan="2" style="text-align: right">&#160;</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 88%">September 30, 2025</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right"><ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:LongTermDebtMaturitiesRepaymentsOfPrincipalInNextTwelveMonths" scale="0" unitRef="usd" id="ixv-32534">15,048,293</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td>September 30, 2026</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:LongTermDebtMaturitiesRepaymentsOfPrincipalInYearTwo" scale="0" unitRef="usd" id="ixv-32535">6,263,296</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>September 30, 2027</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:LongTermDebtMaturitiesRepaymentsOfPrincipalInYearThree" scale="0" unitRef="usd" id="ixv-32536">23,318,589</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-bottom: 1.5pt">September 30, 2028</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-264">&#8212;</div></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; padding-bottom: 2.5pt">Total</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:LongTermDebt" scale="0" unitRef="usd" id="ixv-32537">44,630,178</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td></tr>
  </table></ix:continuation></ix:continuation><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->57<!-- Field: /Sequence --></span></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt"></p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>
</div><ix:nonNumeric contextRef="c0" continuedAt="hnra_ForwardPurchaseAgrementTextBlock-c0_cont_1" escape="true" name="hnra:ForwardPurchaseAgrementTextBlock" id="ixv-29118"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><b>NOTE 6 &#8212; FORWARD
PURCHASE AGREMENT</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><b><i>&#160;</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><b><i>Forward Purchase
Agreement</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">On November 2, 2023,
the Company entered into an agreement with (i) Meteora Capital Partners, LP (&#8220;MCP&#8221;), (ii) Meteora Select Trading Opportunities
Master, LP (&#8220;MSTO&#8221;), and (iii) Meteora Strategic Capital, LLC (&#8220;MSC&#8221; and, collectively with MCP and MSTO, &#8220;FPA
Seller&#8221;) (the &#8220;Forward Purchase Agreement&#8221;) for OTC Equity Prepaid Forward Transactions. For purposes of the Forward
Purchase Agreement, the Company is referred to as the &#8220;Counterparty&#8221;. Capitalized terms used herein but not otherwise defined
shall have the meanings ascribed to such terms in the Forward Purchase Agreement.&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">The Forward Purchase
Agreement provides for a prepayment shortfall in an amount in U.S. dollars equal to <ix:nonFraction contextRef="c388" decimals="4" format="ixt:num-dot-decimal" name="hnra:PercentageOfPrepaymentShortfall" scale="-2" unitRef="pure" id="ixv-32538">0.50</ix:nonFraction>% of the product of the Recycled Shares and the
Initial Price (defined below). FPA Seller in its sole discretion may sell Recycled Shares (i) at any time following November 2, 2023 (the
&#8220;Trade Date&#8221;) at prices greater than the Reset Price or (ii) commencing on the 180th day following the Trade Date at any sales
price, in either case without payment by FPA Seller of any Early Termination Obligation until such time as the proceeds from such sales
equal <ix:nonFraction contextRef="c389" decimals="2" format="ixt:num-dot-decimal" name="hnra:PercentageOfPrepaymentShortfall" scale="-2" unitRef="pure" id="ixv-32539">100</ix:nonFraction>% of the Prepayment Shortfall (as set forth under the section entitled &#8220;Shortfall Sales&#8221; in the Forward Purchase
Agreement) (such sales, &#8220;Shortfall Sales,&#8221; and such Shares, &#8220;Shortfall Sale Shares&#8221;). A sale of Shares is only
(a) a &#8220;Shortfall Sale,&#8221; subject to the terms and conditions herein applicable to Shortfall Sale Shares, when a Shortfall Sale
Notice is delivered under the Forward Purchase Agreement, and (b) an Optional Early Termination, subject to the terms and conditions of
the Forward Purchase Agreement applicable to Terminated Shares, when an OET Notice is delivered under the Forward Purchase Agreement,
in each case the delivery of such notice in the sole discretion of the FPA Seller (as further described in the &#8220;Optional Early Termination&#8221;
and &#8220;Shortfall Sales&#8221; sections in the Forward Purchase Agreement).</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">Following the Closing,
the reset price (the &#8220;Reset Price&#8221;) will be $<ix:nonFraction contextRef="c390" decimals="2" format="ixt:num-dot-decimal" name="hnra:ResetPrice" scale="0" unitRef="usdPershares" id="ixv-32540">10.00</ix:nonFraction>; provided that the Reset Price shall be reduced pursuant to a Dilutive
Offering Reset immediately upon the occurrence of such Dilutive Offering. The Purchased Amount subject to the Forward Purchase Agreement
shall be increased upon the occurrence of a Dilutive Offering Reset to that number of Shares equal to the quotient of (i) the Purchased
Amount divided by (ii) the quotient of (a) the price of such Dilutive Offering divided by (b) $<ix:nonFraction contextRef="c390" decimals="2" format="ixt:num-dot-decimal" name="hnra:DilutiveOfferingDivided" scale="0" unitRef="usdPershares" id="ixv-32541">10.00</ix:nonFraction>.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">From time to time and
on any date following the Trade Date (any such date, an &#8220;OET Date&#8221;) and subject to the terms and conditions in the Forward
Purchase Agreement, FPA Seller may, in its absolute discretion, terminate the Transaction in whole or in part by providing written notice
to Counterparty (the &#8220;OET Notice&#8221;), by the later of (a) the fifth Local Business Day following the OET Date and (b) no later
than the next Payment Date following the OET Date, (which shall specify the quantity by which the Number of Shares shall be reduced (such
quantity, the &#8220;Terminated Shares&#8221;)). The effect of an OET Notice shall be to reduce the Number of Shares by the number of
Terminated Shares specified in such OET Notice with effect as of the related OET Date. As of each OET Date, Counterparty shall be entitled
to an amount from FPA Seller, and the FPA Seller shall pay to Counterparty an amount, equal to the product of (x) the number of Terminated
Shares and (y) the Reset Price in respect of such OET Date. The payment date may be changed within a quarter at the mutual agreement of
the parties.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">The &#8220;Valuation
Date&#8221; will be the earlier to occur of (a) the date that is three (<ix:nonNumeric contextRef="c390" format="ixt-sec:duryear" name="hnra:AfterTheDateoftheClosingofthePurchase" id="ixv-32542">3</ix:nonNumeric>) years after the date of the closing of the Purchase &amp; Sale
(the date of the closing of the Purchase &amp; Sale, the &#8220;Closing Date&#8221;) pursuant to the A&amp;R MIPA, (b) the date specified
by FPA Seller in a written notice to be delivered to Counterparty at FPA Seller&#8217;s discretion (which Valuation Date shall not be
earlier than the day such notice is effective) after the occurrence of any of (w) a VWAP Trigger Event, (x) a Delisting Event, (y) a Registration
Failure or (z) unless otherwise specified therein, upon any Additional Termination Event, and (c) the date specified by FPA Seller in
a written notice to be delivered to Counterparty at FPA Seller&#8217;s sole discretion (which Valuation Date shall not be earlier than
the day such notice is effective). The Valuation Date notice will become effective immediately upon its delivery from FPA Seller to Counterparty
in accordance with the Forward Share Purchase Agreement.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; ">&#160;</p></ix:nonNumeric><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; "></p><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->58<!-- Field: /Sequence --></span></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt"></p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; ">&#160;</p><div>

</div><ix:continuation id="hnra_ForwardPurchaseAgrementTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">On the &#8220;Cash Settlement
Payment Date,&#8221; which is the tenth Local Business Day immediately following the last day of the Valuation Period, the FPA Seller
will remit to the Counterparty an amount equal to the Settlement Amount and will not otherwise be required to return to the Counterparty
any of the Prepayment Amount and the Counterparty shall remit to the FPA Seller the Settlement Amount Adjustment; provided, that if the
Settlement Amount less the Settlement Amount Adjustment is a negative number and either clause (x) of Settlement Amount Adjustment applies
or the Counterparty has elected pursuant to clause (y) of Settlement Amount Adjustment to pay the Settlement Amount Adjustment in cash,
then neither the FPA Seller nor the Counterparty shall be liable to the other party for any payment under the Cash Settlement Payment
Date section of the Forward Purchase Agreement.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">The FPA Seller
has agreed to waive any redemption rights with respect to any Recycled Shares in connection with the Closing, as well as any redemption
rights under the Company&#8217;s certificate of incorporation that would require redemption by the Company.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">Pursuant to the Forward
Purchase Agreement, the FPA Seller obtained <ix:nonFraction contextRef="c390" decimals="0" format="ixt:num-dot-decimal" name="hnra:NumberofRecycledShares" scale="0" unitRef="shares" id="ixv-32543">50,070</ix:nonFraction> shares (&#8220;Recycled Shares&#8221;) and such purchase price of $<ix:nonFraction contextRef="c390" decimals="0" format="ixt:num-dot-decimal" name="hnra:RecycledSharePurchasePrice" scale="0" unitRef="usd" id="ixv-32544">545,356</ix:nonFraction>,&#160;or&#160;$<ix:nonFraction contextRef="c391" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:SharesIssuedPricePerShare" scale="0" unitRef="usdPershares" id="ixv-32545">10.95</ix:nonFraction>&#160;per
share,&#160;was funded by the use of HNRA trust account proceeds as a partial prepayment (&#8220;Prepayment Amount&#8221;), and the FPA
Seller may purchase an additional <ix:nonFraction contextRef="c390" decimals="0" format="ixt:num-dot-decimal" name="hnra:PurchaseanAdditionalShares" scale="0" unitRef="shares" id="ixv-32546">504,425</ix:nonFraction> additional shares under the Forward Purchase Agreement, for the Forward Purchase Agreement redemption&#160;<ix:nonNumeric contextRef="c390" format="ixt-sec:durwordsen" name="hnra:RedemptionDateoftheAcquisitionTerm" id="ixv-32547">3&#160;years</ix:nonNumeric>
from the date of the Acquisition (&#8220;Maturity Date&#8221;).</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">On May 13, 2024, the
FPA Seller alleged that the Company is in breach of the Forward Purchase Agreement related to the issuance of the <ix:nonFraction contextRef="c392" decimals="0" format="ixt:num-dot-decimal" name="hnra:PurchaseanAdditionalShares" scale="0" unitRef="shares" id="ixv-32548">504,525</ix:nonFraction> additional shares
specified in the Forward Purchase Agreement. The Company has not been notified of any formal legal action by the FPA Seller but believes
that it has complied with the terms and conditions of the Forward Purchase Agreement.&#160;&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">The Maturity Date may
be accelerated, at the FPA Sellers&#8217; discretion, if the Company share price trades below $<ix:nonFraction contextRef="c391" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:SharePrice" scale="0" unitRef="usdPershares" id="ixv-32549">3.00</ix:nonFraction>&#160;per share for any&#160;<ix:nonNumeric contextRef="c390" format="ixt-sec:durday" name="hnra:NumberofTradingDays" id="ixv-32550">10</ix:nonNumeric>&#160;trading
days during a&#160;<ix:nonNumeric contextRef="c390" format="ixt-sec:duryear" name="hnra:ConsecutiveTradingDayPeriod" id="ixv-32551">30</ix:nonNumeric>-day consecutive trading-day period or the Company is delisted. The Company&#8217;s common stock traded below minimum
trading price during the period from November 15, 2023 to December 31, 2023, but no acceleration of the Maturity Date has been executed
by the FPA Seller to date.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">The fair value of the
prepayment was $<ix:nonFraction contextRef="c115" decimals="0" format="ixt:num-dot-decimal" name="hnra:FairValueOfPrepayments" scale="0" unitRef="usd" id="ixv-32552">14,257,648</ix:nonFraction> at inception of the agreement, $<ix:nonFraction contextRef="c393" decimals="0" format="ixt:num-dot-decimal" name="hnra:FairValueOfPrepayments" scale="0" unitRef="usd" id="ixv-32553">6,066,324</ix:nonFraction> as of the Closing date and was $<ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OtherAdditionalCapital" scale="0" unitRef="usd" id="ixv-32554">6,067,094</ix:nonFraction> as of December 31, 2023,
and is included as a reduction of additional paid-in capital on the consolidated statement of stockholders&#8217; equity. The estimated
fair value of the Maturity Consideration was $<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="hnra:FairValueOfMaturityConsideration" scale="0" unitRef="usd" id="ixv-32555">1,704,416</ix:nonFraction> at inception of the agreement and was $<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="hnra:FairValueInceptionAgreement" scale="0" unitRef="usd" id="ixv-32556">5,628,863</ix:nonFraction> as of September 30, 2024. The
Company recognized a loss from the change in fair value of the Forward Purchase Agreement of $<ix:nonFraction contextRef="c394" decimals="0" format="ixt:num-dot-decimal" name="hnra:ChangeInFairValueOfForwardPurchaseAgreementLiability" scale="0" sign="-" unitRef="usd" id="ixv-32557">4,209,294</ix:nonFraction> and $<ix:nonFraction contextRef="c390" decimals="0" format="ixt:num-dot-decimal" name="hnra:ChangeInFairValueOfForwardPurchaseAgreementLiability" scale="0" sign="-" unitRef="usd" id="ixv-32558">4,534,766</ix:nonFraction> during the three
and nine months ended September 30, 2024 respectively.</p></ix:continuation><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p><div>

</div><ix:nonNumeric contextRef="c0" continuedAt="_StockholdersEquityNoteDisclosureTextBlock-c0_cont_1" escape="true" name="us-gaap:StockholdersEquityNoteDisclosureTextBlock" id="ixv-29168"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><b>NOTE 7&#160;&#8212;&#160;STOCKHOLDERS&#8217;
EQUITY</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">the Closing, Pogo Royalty
exercised the OpCo Exchange Right as it relates to <ix:nonFraction contextRef="c395" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:StockIssuedDuringPeriodSharesStockOptionsExercised" scale="0" unitRef="shares" id="ixv-32559">200,000</ix:nonFraction> OpCo Class B units (and <ix:nonFraction contextRef="c324" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:StockIssuedDuringPeriodSharesStockOptionsExercised" scale="0" unitRef="shares" id="ixv-32560">200,000</ix:nonFraction> shares of Class B Common Stock), and received
<ix:nonFraction contextRef="c396" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:StockIssuedDuringPeriodSharesNewIssues" scale="0" unitRef="shares" id="ixv-32561">200,000</ix:nonFraction> shares of Class A common stock. During the nine months ended, Pogo Royalty exercises its OpCo Exchange Right related to <ix:nonFraction contextRef="c397" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:StockIssuedDuringPeriodSharesStockOptionsExercised" scale="0" unitRef="shares" id="ixv-32562">420,325</ix:nonFraction>
shares of Class B units and received <ix:nonFraction contextRef="c396" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:StockIssuedDuringPeriodSharesStockOptionsExercised" scale="0" unitRef="shares" id="ixv-32563">420,325</ix:nonFraction> shares of Class A Common stock. As a result of the exchange, ta total of $<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="hnra:ReclassifiedFromNoncontrollingInterest" scale="0" unitRef="usd" id="ixv-32564">2,845,600</ix:nonFraction> was reclassified
from noncontrolling interest to additional paid in capital.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As of September 30, 2024, there were <ix:nonFraction contextRef="c13" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CommonStockSharesOutstanding" scale="0" unitRef="shares" id="ixv-32565">6,957,334</ix:nonFraction> shares of Class A common
stock and <ix:nonFraction contextRef="c14" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CommonStockSharesOutstanding" scale="0" unitRef="shares" id="ixv-32566">1,379,675</ix:nonFraction> shares of Class B common stock outstanding.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; ">&#160;</p></ix:nonNumeric><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; "></p><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->59<!-- Field: /Sequence --></span></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt"></p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; ">&#160;</p><div>

</div><ix:continuation continuedAt="_StockholdersEquityNoteDisclosureTextBlock-c0_cont_2" id="_StockholdersEquityNoteDisclosureTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On March 4, 2024, the Compensation Committee of
the Board of Directors approved awards of restricted stock units (&#8220;RSU&#8217;s&#8221;) to various employees, non-employee directors
and consultants. Non-employee directors received an aggregate of <ix:nonFraction contextRef="c398" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:StockIssuedDuringPeriodSharesNewIssues" scale="0" unitRef="shares" id="ixv-32567">224,500</ix:nonFraction> RSU&#8217;s, with <ix:nonFraction contextRef="c398" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsVestedNumberOfShares" scale="0" unitRef="shares" id="ixv-32568">112,000</ix:nonFraction> RSU&#8217;s vesting over <ix:nonNumeric contextRef="c398" format="ixt-sec:duryear" name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardAwardVestingPeriod1" id="ixv-32569">3</ix:nonNumeric> years beginning
November 15, 2024, and <ix:nonFraction contextRef="c399" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsVestedNumberOfShares" scale="0" unitRef="shares" id="ixv-32570">112,500</ix:nonFraction> RSU&#8217;s fully vesting at November 15, 2024. Employees received a total of <ix:nonFraction contextRef="c400" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardMaximumNumberOfSharesPerEmployee" scale="0" unitRef="shares" id="ixv-32571">285,000</ix:nonFraction> RSU&#8217;s, including
<ix:nonFraction contextRef="c401" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardMaximumNumberOfSharesPerEmployee" scale="0" unitRef="shares" id="ixv-32572">50,000</ix:nonFraction> RSU&#8217;s each to the Company&#8217;s CEO, CFO and General Counsel pursuant to their employment agreements. A total of <ix:nonFraction contextRef="c402" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsVestedNumberOfShares" scale="0" unitRef="shares" id="ixv-32573">35,000</ix:nonFraction>
RSU&#8217;s of the employee RSU&#8217;s vest immediately, with the remainder over <ix:nonNumeric contextRef="c254" format="ixt-sec:duryear" name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardAwardVestingPeriod1" id="ixv-32574">3</ix:nonNumeric> years beginning November 15, 2024. The awards also
included <ix:nonFraction contextRef="c403" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardSharesPurchasedForAward" scale="0" unitRef="shares" id="ixv-32575">60,000</ix:nonFraction> RSU&#8217;s pursuant to the agreement with RMH, Ltd., and <ix:nonFraction contextRef="c402" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardSharesPurchasedForAward" scale="0" unitRef="shares" id="ixv-32576">30,000</ix:nonFraction> RSU&#8217;s to the Company&#8217;s former President.
These consultant awards vest on November 15, 2024. The Company estimated the fair value of the RSU&#8217;s using the stock price of $<ix:nonFraction contextRef="c404" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:SharePrice" scale="0" unitRef="usdPershares" id="ixv-32577">1.97</ix:nonFraction>
per share on the date of grant.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During the nine months ended September 30, 2024, the Company agree
to issue <ix:nonFraction contextRef="c405" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CommonStockSharesIssued" scale="0" unitRef="shares" id="ixv-32578">27,963</ix:nonFraction> shares of Class A common stock to officers and employees for shares pledged as collateral on the Company&#8217;s Senior
Secured Term Loan, which vest immediately. The Company estimated the fair value of the shares using the closing stock price on the date
of the grant of $<ix:nonFraction contextRef="c406" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsVestedWeightedAverageGrantDateFairValue" scale="0" unitRef="usdPershares" id="ixv-32579">2.01</ix:nonFraction> and recognized stock-based compensation expense of $<ix:nonFraction contextRef="c406" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AllocatedShareBasedCompensationExpense" scale="0" unitRef="usd" id="ixv-32580">56,708</ix:nonFraction>.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During the nine months ended September 30, 2024,
the Company issued <ix:nonFraction contextRef="c407" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CommonStockSharesIssued" scale="0" unitRef="shares" id="ixv-32581">75,000</ix:nonFraction> shares of Class A common stock to a consultant, which vest annually over three years. The Company estimated
the fair value of the shares using the closing stock price on the date of the grant of $<ix:nonFraction contextRef="c0" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsVestedWeightedAverageGrantDateFairValue" scale="0" unitRef="usdPershares" id="ixv-32582">2.06</ix:nonFraction> per share. The Company recognized $<ix:nonFraction contextRef="c322" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AllocatedShareBasedCompensationExpense" scale="0" unitRef="usd" id="ixv-32583">17,167</ix:nonFraction>
of stock-based compensation expense related to this award.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During the nine months ended September 30, 2024,
the Company issued <ix:nonFraction contextRef="c408" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CommonStockSharesIssued" scale="0" unitRef="shares" id="ixv-32584">60,000</ix:nonFraction> shares of Class A common stock to the Company&#8217;s former CEO pursuant to his termination agreement, which
vested immediately. The Company estimated the fair value of the shares using the closing stock price on the date of the grant of $<ix:nonFraction contextRef="c409" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsVestedWeightedAverageGrantDateFairValue" scale="0" unitRef="usdPershares" id="ixv-32585">1.80</ix:nonFraction>
per share and recognized stock-based compensation expense of $<ix:nonFraction contextRef="c409" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AllocatedShareBasedCompensationExpense" scale="0" unitRef="usd" id="ixv-32586">108,000</ix:nonFraction>.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company recognized total stock-based compensation
expense of $<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AllocatedShareBasedCompensationExpense" scale="0" unitRef="usd" id="ixv-32587">1,516,933</ix:nonFraction> during the nine months ended September 30, 2024 and expects to recognize an additional $<ix:nonFraction contextRef="c410" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AllocatedShareBasedCompensationExpense" scale="0" unitRef="usd" id="ixv-32588">656,453</ix:nonFraction> through December
31, 2026 assuming all awards vest.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Common Stock Purchase Agreement</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On October 17, 2022, the Company entered into
a common stock purchase agreement (as amended, the &#8220;Common Stock Purchase Agreement&#8221;) and a related registration rights agreement
(the &#8220;White Lion RRA&#8221;) with White Lion Capital, LLC, a Nevada limited liability company (&#8220;White Lion&#8221;). Pursuant
to the Common Stock Purchase Agreement, the Company has the right, but not the obligation to require White Lion to purchase, from time
to time, up to $<ix:nonFraction contextRef="c411" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProceedsFromIssuanceOfCommonStock" scale="0" unitRef="usd" id="ixv-32589">150,000,000</ix:nonFraction> in aggregate gross purchase price of newly issued shares of the Company&#8217;s common stock, par value $<ix:nonFraction contextRef="c412" decimals="4" format="ixt:num-dot-decimal" name="us-gaap:CommonStockParOrStatedValuePerShare" scale="0" unitRef="usdPershares" id="ixv-32590">0.0001</ix:nonFraction>
per share, subject to certain limitations and conditions set forth in the Common Stock Purchase Agreement. Capitalized terms used but
not otherwise defined herein shall have the meaning given to such terms by the Common Stock Purchase Agreement.&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Subject to the satisfaction of certain customary
conditions including, without limitation, the effectiveness of a registration statement registering the shares issuable pursuant to the
Common Stock Purchase Agreement, the Company&#8217;s right to sell shares to White Lion will commence on the effective date of the registration
statement and extend until December 31, 2026. During such term, subject to the terms and conditions of the Common Stock Purchase Agreement,
the Company may notify White Lion when the Company exercises its right to sell shares (the effective date of such notice, a &#8220;Notice
Date&#8221;). The number of shares sold pursuant to any such notice may not exceed (i) the lower of (a) $<ix:nonFraction contextRef="c413" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:SaleOfStockConsiderationReceivedOnTransaction" scale="0" unitRef="usd" id="ixv-32591">2,000,000</ix:nonFraction> and (b) the dollar
amount equal to the product of (1) the Effective Daily Trading Volume (2) the closing price of common stock on the Effective Date (3)
<ix:nonFraction contextRef="c413" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardPurchasePriceOfCommonStockPercent" scale="-2" unitRef="pure" id="ixv-32592">400</ix:nonFraction>% and (4) <ix:nonFraction contextRef="c413" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:EffectiveIncomeTaxRateReconciliationDeductionsDividends" scale="-2" unitRef="pure" id="ixv-32593">30</ix:nonFraction>%, divided by the closing price of common stock on NYSE American preceding the Notice Date and (ii) a number of shares
of common stock equal to the Average Daily Trading Volume multiplied by the Percentage Limit.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 202; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->60<!-- Field: /Sequence --></span></p></div><div>
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    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:continuation continuedAt="_StockholdersEquityNoteDisclosureTextBlock-c0_cont_3" id="_StockholdersEquityNoteDisclosureTextBlock-c0_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The purchase price to be paid by White Lion for
any such shares will equal <ix:nonFraction contextRef="c414" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:PercentageOfWeightedAverageCostInventory" scale="-2" unitRef="pure" id="ixv-32594">96</ix:nonFraction>% of the lowest daily volume-weighted average price of common stock during a period of <ix:nonNumeric contextRef="c413" continuedAt="hnra_ConsecutiveTradingDayPeriod-c413_cont_1" format="ixt-sec:durwordsen" name="hnra:ConsecutiveTradingDayPeriod" id="ixv-32595">two</ix:nonNumeric> consecutive trading<ix:continuation id="hnra_ConsecutiveTradingDayPeriod-c413_cont_1">
days</ix:continuation> following the applicable Notice Date.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company will have the right to terminate the
Common Stock Purchase Agreement at any time after Commencement, at no cost or penalty, upon three trading days&#8217; prior written notice.
Additionally, White Lion will have the right to terminate the Common Stock Purchase Agreement upon <ix:nonNumeric contextRef="c413" format="ixt-sec:durwordsen" name="hnra:CommencingDaysAftertheBusinessCombination" id="ixv-32597">three days</ix:nonNumeric>&#8217; prior written notice
to the Company if (i) there is a Fundamental Transaction, (ii) the Company is in breach or default in any material respect of the White
Lion RRA, (iii) there is a lapse of the effectiveness, or unavailability of, the Registration Statement for a period of 45 consecutive
trading days or for more than an aggregate of 90 trading days in any 365-day period, (iv) the suspension of trading of the common stock
for a period of five consecutive trading days, (v) the material breach of the Common Stock Purchase Agreement by the Company, which breach
is not cured within the applicable cure period or (vi) a Material Adverse Effect has occurred and is continuing. No termination of the
Common Stock Purchase Agreement will affect the registration rights provisions contained in the White Lion RRA.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">On March 7, 2024, the
Company entered into an Amendment No. 1 to Common Stock Purchase Agreement (the &#8220;Amendment&#8221;) with White Lion. Pursuant to
the Amendment, the Company and White Lion agreed to a fixed number of Commitment Shares equal to <ix:nonFraction contextRef="c415" decimals="0" format="ixt:num-dot-decimal" name="hnra:NumberofCommitmentShares" scale="0" unitRef="shares" id="ixv-32598">440,000</ix:nonFraction> shares of common stock to be
issued to White Lion in consideration for commitments of White Lion under the Common Stock Purchase Agreement, which the Company agreed
to include all of the Commitment Shares on the Initial Registration Statement filed by the Company. The Company recognized share-based
compensation expense of $<ix:nonFraction contextRef="c416" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AllocatedShareBasedCompensationExpense" scale="0" unitRef="usd" id="ixv-32599">573,568</ix:nonFraction> related to the Amendment.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">Finally, pursuant to
the Amendment, the Company&#8217;s right&#160;<span>to sell shares of common stock to White Lion will
now extend until December 31, 2026.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">On June 17, 2024, the
Company entered into an Amendment No. 2 to Common Stock Purchase Agreement (the &#8220;2nd Amendment&#8221;) with White Lion. Pursuant
to the 2nd Amendment, the Company and White Lion agreed to amend the process of a Rapid Purchase, whereby the parties will close on the
Rapid Purchase on the trading day the notice of the applicable Rapid Purchase is given. The 2nd Amendment, among other things, also removed
the maximum number of shares required to be purchased upon notice of a Rapid Purchase, added a limit of&#160;<ix:nonFraction contextRef="c417" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CommonStockDividendsShares" scale="0" unitRef="shares" id="ixv-32600">100,000</ix:nonFraction>&#160;shares of Common
Stock per individual request, and revised the purchase price of a Rapid Purchase to equal the lowest traded price of Common Stock during
the one hour following White Lion&#8217;s acceptance of the Rapid Purchase for each request. In addition, White Lion agreed that, on any
single business day, it shall not publicly resell an aggregate amount of Commitment Shares in an amount that exceeds&#160;<ix:nonFraction contextRef="c418" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentInterestRateEffectivePercentage" scale="-2" unitRef="pure" id="ixv-32601">7</ix:nonFraction>% of the daily
trading volume of the Common Stock for such business day, excluding any trades before or after regular trading hours and any block trades.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">In addition, the Company may, from time to time while a purchase notice
is active, issue a Rapid Purchase Notice to White Lion for the purchase of shares (not to exceed&#160;<ix:nonFraction contextRef="c419" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:StockIssuedDuringPeriodSharesNewIssues" scale="0" unitRef="shares" id="ixv-32602">100,000</ix:nonFraction>&#160;shares per individual
request) at a purchase price equal to the lowest traded price of Common Stock during the one hour following White Lion&#8217;s acceptance
of the Rapid Purchase for each request, and which the parties will close on the Rapid Purchase on the trading day the notice of the applicable
Rapid Purchase is given within <span style="-sec-ix-hidden: hidden-fact-265">two</span> Business Days of the applicable Rapid Purchase Date. Furthermore, White Lion agreed that, on any single
Business Day, it shall not publicly resell an aggregate amount of Commitment Shares in an amount that exceeds&#160;<ix:nonFraction contextRef="c421" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentInterestRateEffectivePercentage" scale="-2" unitRef="pure" id="ixv-32603">7</ix:nonFraction>% of the daily trading
volume of our Class A Common Stock for the such preceding Business Day, excluding any trades before or after regular trading hours and
any block trades.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">In addition, pursuant
to the Amendment, the Company may, from time to time while a Purchase Notice is active, issue a Rapid Purchase Notice to White Lion which
the parties will close on the Rapid Purchase within <ix:nonNumeric contextRef="c0" continuedAt="hnra_RepaidPurchaseBusinessDays-c0_cont_1" format="ixt-sec:durwordsen" name="hnra:RepaidPurchaseBusinessDays" id="ixv-32604">two</ix:nonNumeric> Business<ix:continuation id="hnra_RepaidPurchaseBusinessDays-c0_cont_1"> Days</ix:continuation> of the applicable Rapid Purchase Date. Furthermore, White Lion agreed
that, on any single Business Day, it shall not publicly resell an aggregate amount of Commitment Shares in an amount that exceeds <ix:nonFraction contextRef="c422" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentInterestRateEffectivePercentage" scale="-2" unitRef="pure" id="ixv-32606">7</ix:nonFraction>% of
the daily trading volume of the Common Stock for the preceding Business Day.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p></ix:continuation><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "></p><div>

</div><!-- Field: Page; Sequence: 203; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->61<!-- Field: /Sequence --></span></p></div><div>
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    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p><div>

</div><ix:continuation id="_StockholdersEquityNoteDisclosureTextBlock-c0_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During the nine months ended September 30, 2024,
the Company issued <ix:nonFraction contextRef="c423" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CommonStockSharesIssued" scale="0" unitRef="shares" id="ixv-32607">1,000,000</ix:nonFraction> shares under the Common Stock Purchase Agreement for $<ix:nonFraction contextRef="c424" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProceedsFromDebtNetOfIssuanceCosts" scale="0" unitRef="usd" id="ixv-32608">1,184,272</ix:nonFraction> in net cash proceeds, including <ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:StockIssuedDuringPeriodSharesNewIssues" scale="0" unitRef="shares" id="ixv-32609">50,000</ix:nonFraction> shares
related to $<ix:nonFraction contextRef="c413" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProceedsFromIssuanceOfCommonStock" scale="0" unitRef="usd" id="ixv-32610">108,485</ix:nonFraction> of cash proceeds not yet received by September 30, 2024.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Registration Rights Agreement (White Lion)</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i>&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Concurrently with the execution of the Common
Stock Purchase Agreement, the Company entered into the White Lion RRA with the White Lion in which the Company has agreed to register
the shares of common stock purchased by White Lion with the SEC for resale within <ix:nonNumeric contextRef="c0" format="ixt-sec:durday" name="hnra:ResaleofConsummationBusinessCombinationDays" id="ixv-32611">30</ix:nonNumeric> days of the consummation of a business combination.
The White Lion RRA also contains usual and customary damages provisions for failure to file and failure to have the registration statement
declared effective by the SEC within the time periods specified.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Common Stock Purchase Agreement and the White
Lion RRA contain customary representations, warranties, conditions and indemnification obligations of the parties. The representations,
warranties and covenants contained in such agreements were made only for purposes of such agreements and as of specific dates, were solely
for the benefit of the parties to such agreements and may be subject to limitations agreed upon by the contracting parties.</p></ix:continuation><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; "><b>&#160;</b></p><div>

</div><ix:nonNumeric contextRef="c0" continuedAt="_FairValueDisclosuresTextBlock-c0_cont_1" escape="true" name="us-gaap:FairValueDisclosuresTextBlock" id="ixv-29271"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; "><b>NOTE 8 &#8212;&#160;FAIR VALUE OF FINANCIAL
INSTRUMENTS</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The fair value of the Company&#8217;s assets and
liabilities, which qualify as financial instruments under FASB ASC&#160;820, &#8220;Fair Value Measurement&#8221;, approximates the carrying
amounts represented on the balance sheet.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">The Fair value is defined
as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market
participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring
fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities
(Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.25in"/><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Level
1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets;</span></td>
</tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0.25in; text-align: justify">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 45pt; text-align: justify; text-indent: -9pt; ">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0.25in; text-align: justify">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">In some circumstances,
the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances, the
fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant
to the fair value measurement.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><b>Recurring Basis</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">Assets and liabilities
measured at fair value on a recurring basis are as follows:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><i>&#160;</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><i>Derivatives</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">The Company&#8217;s commodity
price derivatives primarily represent crude oil collar contracts (some with long calls), fixed price swap contracts and differential swap
contracts. The asset and liability measurements for the Company&#8217;s commodity price derivative contracts are determined using Level
2 inputs. The asset and liability values attributable to the Company&#8217;s commodity price derivatives were determined based on inputs
that include, but not limited to, the contractual price of the underlying position, current market prices, crude oil forward curves, discount
rates, and volatility factors. The Company had a net derivative asset of $<ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DerivativeAssetsLiabilitiesAtFairValueNet" scale="0" unitRef="usd" id="ixv-32612">794,195</ix:nonFraction> as of September 30, 2024 and had a net derivative asset
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</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p><div>

</div><ix:continuation id="_FairValueDisclosuresTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Forward Purchase Agreement</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The change in fair value of the Forward Purchase
Agreement (both the FPA Put Option liability and Fixed Maturity Consideration) is included in other expense, net in the consolidated statements
of operations and comprehensive loss. The fair value of the FPA was estimated using a Monte-Carlo Simulation in a risk-neutral framework.
Specifically, the future stock price is simulated assuming a Geometric Brownian Motion (&#8220;GBM&#8221;). For each simulated path, the
forward purchase value is calculated based on the contractual terms and then discounted back to present. Finally, the value of the forward
is calculated as the average present value over all simulated paths. The Maturity Consideration was also valued as part of this model
as the timing of the payment of the Maturity Consideration may be accelerated if the Maturity Date is accelerated. The model also considered
the likelihood of a dilutive offering of common stock.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;&#160;</p>

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inputs used in calculating the fair value of the prepaid forward contract and the Maturity Consideration as of September 30, 2024 and
December&#160;31, 2023:</ix:nonNumeric></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation id="_FairValueAssetsAndLiabilitiesMeasuredOnRecurringAndNonrecurringBasisValuationTechniquesTableTextBlock-c0_cont_1"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom">
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    <td colspan="2" style="text-align: center">&#160;</td><td>&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-left: 1pt">Risk-free interest rate</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 1pt">Expected dividend yield</td><td>&#160;</td>
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  </table></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">The Company estimated
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the likelihood of a Dilutive Offering at a price of $<ix:nonFraction contextRef="c425" decimals="2" format="ixt:num-dot-decimal" name="hnra:DilutiveOfferingPrice" scale="0" unitRef="usdPershares" id="ixv-32625">5.00</ix:nonFraction> per share to be <ix:nonFraction contextRef="c425" decimals="2" format="ixt:num-dot-decimal" name="hnra:ForwardPurchaseAgreementEstimateRate" scale="-2" unitRef="pure" id="ixv-32626">50</ix:nonFraction>% within nine months of December 31, 2023. The FPA estimated
fair value is considered a level 3 fair value measurement.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><i>Warrant Liability</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Based on the redemption right present in the warrants
issued in connection with promissory notes, the warrants are accounted for as a liability in accordance with ASC 480 and ASC 815, with
the changes in fair value of the warrants recognize in the statement of operations.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company valued the warrants using the trading prices of the Public
Warrants, which mirror the terms of the note payable warrants. The Company also estimated the fair value of the redemption put using a
present value calculation for the time from the Closing Date of the MIPA through the 18-month redemption date and an estimated discount
rate of <ix:nonFraction contextRef="c426" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:DerivativeFixedInterestRate" scale="-2" unitRef="pure" id="ixv-32627">15</ix:nonFraction>%. The initial fair value of the warrant liabilities for warrants issued during the period was $<ix:nonFraction contextRef="c426" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:LiabilitiesFairValueDisclosure" scale="0" unitRef="usd" id="ixv-32628">409,834</ix:nonFraction> and was recognized as
debt discount. The estimated fair value of the warrants and redemption put was $<ix:nonFraction contextRef="c427" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:FairValueAdjustmentOfWarrants" scale="0" unitRef="usd" id="ixv-32629">5,672,604</ix:nonFraction> and $<ix:nonFraction contextRef="c428" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:TemporaryEquityAccretionToRedemptionValue" scale="0" unitRef="usd" id="ixv-32630">4,777,970</ix:nonFraction> as of September 30, 2024 and
December 31, 2023, respectively, and the Company recognized a change in fair value of the warrant liability of a loss of $<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:FairValueAdjustmentOfWarrants" scale="0" unitRef="usd" id="ixv-32631">484,799</ix:nonFraction> during
the nine months ended September 30, 2024. The warrant liability estimated fair value is considered a level 3 fair value measurement.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><b>Nonrecurring Basis</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">The carrying value of
the Company&#8217;s financial instruments, consisting of cash, accounts receivable, accounts payable and accrued expenses, approximates
their fair value due to the short maturity of such instruments. Financial instruments also consist of debt for which fair value approximates
carrying values as the debt bears interest at fixed or variable rates which are reflective of current rates otherwise available to the
Company. The Company is not exposed to significant interest, currency or credit risks arising from these financial instruments.</p></ix:continuation><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 205; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->63<!-- Field: /Sequence --></span></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt"></p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><ix:nonNumeric contextRef="c0" continuedAt="_RelatedPartyTransactionsDisclosureTextBlock-c0_cont_1" escape="true" name="us-gaap:RelatedPartyTransactionsDisclosureTextBlock" id="ixv-29443"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>NOTE 9 &#8212;&#160;RELATED PARTY TRANSACTIONS</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>&#160;</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On May 5, 2022, the Company entered into a Referral
Fee and Consulting Agreement (the &#8220;Consulting Agreement&#8221;) with Alexandria VMA Capital, LLC (&#8220;Alexandria&#8221;), an
entity controlled by Mr. Caravaggio, who became the Company&#8217;s CEO on December 17, 2023. Pursuant to the Consulting Agreement, Alexandria
provided information and contacts with suitable investments and acquisition candidates for the Company&#8217;s initial business combination.
In addition, Alexandria provided due diligence, purchasing and negotiating strategy advice, organizational and operational advice, and
such other services as requested by the Company. In consideration of the services provided by Alexandria, the Company paid to Alexander
Capital a referral fee of $<ix:nonFraction contextRef="c435" decimals="0" format="ixt:num-dot-decimal" name="hnra:ReferralFeesService" scale="0" unitRef="usd" id="ixv-32632">1,800,000</ix:nonFraction> equal to <ix:nonFraction contextRef="c435" decimals="2" format="ixt:num-dot-decimal" name="hnra:ReferralFeesPercentageoftheBusinessCombination" scale="-2" unitRef="pure" id="ixv-32633">2</ix:nonFraction>% of the total value of the Company&#8217;s business combination, with half being paid
by the issuance of <ix:nonFraction contextRef="c436" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:StockIssuedDuringPeriodSharesOther" scale="0" unitRef="shares" id="ixv-32634">89,000</ix:nonFraction> shares of the Company&#8217;s Class A Common Stock during the period from November 15, 2023 to December 31,
2023 for the Successor. No gain was recognized on the issuance of these shares for the difference in the fair value of the shares and
the $<ix:nonFraction contextRef="c229" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:RelatedPartyTransactionPurchasesFromRelatedParty" scale="0" unitRef="usd" id="ixv-32635">900,000</ix:nonFraction> payable due to the related party nature of the transaction. The remaining $<ix:nonFraction contextRef="c226" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AccountsPayableCurrent" scale="0" unitRef="usd" id="ixv-32636">900,000</ix:nonFraction> was reflected as accounts payable. As
of September 30, 2024 and December 31, 2023, the Company owes $<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PaymentsForFees" scale="0" unitRef="usd" id="ixv-32637">568,000</ix:nonFraction> and $<ix:nonFraction contextRef="c115" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PaymentsForFees" scale="0" unitRef="usd" id="ixv-32638">762,000</ix:nonFraction> of the fee.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On January 20, 2023, January 27, 2023, and February
14, 2023, Mr. Caravaggio entered into Private Notes Payable with the Company. Pursuant to the Private Notes Payable, Mr. Caravaggio paid
an aggregate amount of $<ix:nonFraction contextRef="c437" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NotesPayable" scale="0" unitRef="usd" id="ixv-32639">179,000</ix:nonFraction> and received promissory notes in the aggregate principal amount of $<ix:nonFraction contextRef="c438" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProceedsFromNotesPayable" scale="0" unitRef="usd" id="ixv-32640">179,000</ix:nonFraction>, accruing interest at a rate
of <ix:nonFraction contextRef="c439" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:InvestmentInterestRate" scale="-2" unitRef="pure" id="ixv-32641">15</ix:nonFraction>% per annum, and common stock warrants to purchase an aggregate of <ix:nonFraction contextRef="c440" decimals="0" format="ixt:num-dot-decimal" name="hnra:WarrantstoPurchaseanAggregateShares" scale="0" unitRef="shares" id="ixv-32642">179,000</ix:nonFraction> shares of Class A Common Stock of the Company at an exercise
price of $<ix:nonFraction contextRef="c441" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:ClassOfWarrantOrRightExercisePriceOfWarrantsOrRights1" scale="0" unitRef="usdPershares" id="ixv-32643">11.50</ix:nonFraction> per share. The warrants issued to Mr. Caravaggio are identical to the Public Warrants that are publicly traded on the
NYSE American under the symbol &#8220;HNRAQ&#8221; in all material respects, except that the warrants were not transferable, assignable
or salable until 30 days after the Company&#8217;s initial business combination. The warrants are exercisable on the same basis as the
Public Warrants.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On February 14, 2023, the Company entered into
a consulting agreement with Donald Orr, the Company&#8217;s former President, which became effective upon the closing of the MIPA for
a term of three years. Under the agreement, the Company will pay Mr. Orr&#160;an initial cash amount of $<ix:nonFraction contextRef="c442" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:Cash" scale="0" unitRef="usd" id="ixv-32644">25,000</ix:nonFraction>, an initial award of <ix:nonFraction contextRef="c443" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardSharesPurchasedForAward" scale="0" unitRef="shares" id="ixv-32645">30,000</ix:nonFraction>
shares of common stock, a monthly payment of $<ix:nonFraction contextRef="c238" decimals="0" format="ixt:num-dot-decimal" name="hnra:InitialMonthlyPayment" scale="0" unitRef="usd" id="ixv-32646">8,000</ix:nonFraction> for the first year of the agreement and $<ix:nonFraction contextRef="c238" decimals="0" format="ixt:num-dot-decimal" name="hnra:AgreementAmountPaid" scale="0" unitRef="usd" id="ixv-32647">12,000</ix:nonFraction> per month for the remaining two years,
and two grants, each consisting of restricted stock units (&#8220;RSUs&#8221;) calculated by dividing $<ix:nonFraction contextRef="c238" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:StockIssuedDuringPeriodValueRestrictedStockAwardNetOfForfeitures" scale="0" unitRef="usd" id="ixv-32648">150,000</ix:nonFraction> by the stock price on the
one year and two year anniversary of the initial Business Combination. Each of the RSU awards will vest upon the one year and two-year
anniversary of the grants. In the event of termination of Mr. Orr without cause, Mr. Orr will be entitled to 12 months of the monthly
payment in effect at that time, and the RSU awards issued to Mr. Orr shall fully vest. The <ix:nonFraction contextRef="c444" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:SaleOfStockNumberOfSharesIssuedInTransaction" scale="0" unitRef="shares" id="ixv-32649">30,000</ix:nonFraction> RSU&#8217;s were approved by the Board
and issued in March of 2024.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On February 15, 2023, the Company entered into
a consulting agreement with Rh&#244;ne Merchant House, Ltd. (&#8220;RMH Ltd&#8221;), a company control by the Company&#8217;s former
Chairman and CEO Donald H. Goree, which became effective upon the closing of the MIPA for a term of three years. Under the agreement,
the Company will pay to RMH Ltd&#160;an initial cash amount of $<ix:nonFraction contextRef="c445" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:Cash" scale="0" unitRef="usd" id="ixv-32650">50,000</ix:nonFraction>, an initial award of <ix:nonFraction contextRef="c244" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardSharesPurchasedForAward" scale="0" unitRef="shares" id="ixv-32651">60,000</ix:nonFraction> shares of common stock, a monthly payment
of $<ix:nonFraction contextRef="c244" decimals="0" format="ixt:num-dot-decimal" name="hnra:InitialMonthlyPayment" scale="0" unitRef="usd" id="ixv-32652">22,000</ix:nonFraction>, and two grants, each consisting of RSUs calculated by dividing $<ix:nonFraction contextRef="c243" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:StockIssuedDuringPeriodValueRestrictedStockAwardNetOfForfeitures" scale="0" unitRef="usd" id="ixv-32653">250,000</ix:nonFraction> by the stock price on the one year and two-year anniversary
of the initial Business Combination. Each of the RSU awards will vest upon the one year and two-year anniversary of the grants. In the
event of termination of RMH Ltd. without cause, RMH Ltd. will be entitled to $<ix:nonFraction contextRef="c244" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:SaleOfStockConsiderationReceivedPerTransaction" scale="0" unitRef="usd" id="ixv-32654">264,000</ix:nonFraction>, and the RSU awards issued to RMH Ltd. shall fully
vest. The <ix:nonFraction contextRef="c446" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:SaleOfStockNumberOfSharesIssuedInTransaction" scale="0" unitRef="shares" id="ixv-32655">60,000</ix:nonFraction> RSU&#8217;s were approved by the Board of Directors and issued in March of 2024.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Effective May 6, 2024, the Company and RMH Ltd.
entered into a settlement and mutual release agreement pursuant to which the Company paid $<ix:nonFraction contextRef="c447" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:Cash" scale="0" unitRef="usd" id="ixv-32656">100,000</ix:nonFraction>&#160;in cash, with $<ix:nonFraction contextRef="c448" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProceedsFromLegalSettlements" scale="0" unitRef="usd" id="ixv-32657">50,000</ix:nonFraction>&#160;paid
on or before execution and the remaining $<ix:nonFraction contextRef="c449" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProceedsFromLegalSettlements" scale="0" unitRef="usd" id="ixv-32658">50,000</ix:nonFraction>&#160;by July 24, 2024. The Company also agreed to issue&#160;<ix:nonFraction contextRef="c450" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:StockIssuedDuringPeriodSharesNewIssues" scale="0" unitRef="shares" id="ixv-32659">150,000</ix:nonFraction>&#160;shares of Class
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compensation expense related to the Class A Common Shares.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p></ix:nonNumeric><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><ix:continuation id="_RelatedPartyTransactionsDisclosureTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>Predecessor </i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">In December of 2022,
the Predecessor entered into a related party promissory note receivable agreement with an entity controlled by owners of the Company in
an amount of $<ix:nonFraction contextRef="c452" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProceedsFromRelatedPartyDebt" scale="0" unitRef="usd" id="ixv-32662">4,000,000</ix:nonFraction>. The loan bore interest at a rate equal to that of the rate that the Company pays to borrow funds for its own
account plus <ix:nonFraction contextRef="c453" decimals="3" format="ixt:num-dot-decimal" name="us-gaap:InvestmentInterestRate" scale="-2" unitRef="pure" id="ixv-32663">0.5</ix:nonFraction>%. The loan was retired at the Closing Date by the Sellers.</p></ix:continuation><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><ix:nonNumeric contextRef="c0" escape="true" name="us-gaap:CommitmentsAndContingenciesDisclosureTextBlock" id="ixv-29483"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>NOTE 10&#160;&#8212;&#160;COMMITMENTS AND CONTINGENCIES</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Contingencies</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company is a party to various legal actions
arising in the ordinary course of its businesses. In accordance with ASC 450, Contingencies, the Company accrues reserves for outstanding
lawsuits, claims and proceedings when a loss contingency is probable and can be reasonably estimated. The Company estimates the amount
of loss contingencies using current available information from legal proceedings, advice from legal counsel and available insurance coverage.
Due to the inherent subjectivity of the assessments and unpredictability of the outcomes of the legal proceedings, any amounts accrued
or included in this aggregate amount may not represent the ultimate loss to the Company from the legal proceedings in question. Thus,
the Company&#8217;s exposure and ultimate losses may be higher, and possibly significantly more, than the amounts accrued.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Environmental</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">From time to time, and in the ordinary course
of business, the Company may be subject to certain environmental liabilities. Environmental expenditures that relate to an existing condition
caused by past operations and have no future economic benefits are expensed. Environmental expenditures that extend the life of the related
property or mitigate or prevent future environmental contamination are capitalized. Liabilities for expenditures that will not qualify
for capitalization are recorded when environmental assessment and/or remediation is probable, and the costs can be reasonably estimated.
Such liabilities are undiscounted unless the timing of cash payments for the liability is fixed or reliably determinable. Environmental
liabilities normally involve estimates that are subject to revision until settlement or remediation occurs.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As of September 30, 2024 and December 31, 2023, the Company had recorded
an environmental remediation liability of $<ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OtherLiabilitiesNoncurrent" scale="0" unitRef="usd" id="ixv-32664"><ix:nonFraction contextRef="c1" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OtherLiabilitiesNoncurrent" scale="0" unitRef="usd" id="ixv-32665">675,000</ix:nonFraction></ix:nonFraction> relating to an oil spill at one of the Company&#8217;s producing sites in fiscal year
2017 which is recorded in other liabilities in the consolidated balance sheets. The producing site was subsequently sold in 2019 and the
Predecessor indemnified the purchaser for the remediation costs. Management based the remediation liability on the undiscounted cost received
from third- party quotes to remediate the spill. As of June 30, 2024, the Company does not believe it is likely remediation will be required
in the next five years.</p></ix:nonNumeric><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 207; Value: 1 --><div>
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    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:nonNumeric contextRef="c0" escape="true" name="us-gaap:SubsequentEventsTextBlock" id="ixv-29514"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>NOTE 11 &#8212; SUBSEQUENT EVENTS</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company evaluated subsequent events and transactions
that occurred after the balance sheet date up to the date that the consolidated financial statements were issued.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On October 3, 2024, Pogo Royalty Exchanged <ix:nonFraction contextRef="c454" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ExcessStockSharesIssued" scale="0" unitRef="shares" id="ixv-32666">879,675</ix:nonFraction>
OpCo Class B Units for <ix:nonFraction contextRef="c455" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ExcessStockSharesIssued" scale="0" unitRef="shares" id="ixv-32667">1,379,675</ix:nonFraction> shares of Class A Common Stock. As a result, there are <ix:nonFraction contextRef="c456" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CommonStockSharesOutstanding" scale="0" unitRef="shares" id="ixv-32668">500,000</ix:nonFraction> remaining Class B Common shares outstanding
as of this filing.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Subsequent to September 30, 2024, the Company
has issued <ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ExcessStockSharesIssued" scale="0" unitRef="shares" id="ixv-32669">4,000,000</ix:nonFraction> shares pursuant to the Common Stock Purchase Agreement for net proceeds of $<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProceedsFromDebtNetOfIssuanceCosts" scale="0" unitRef="usd" id="ixv-32670">4,575,714</ix:nonFraction>. The Company also issued the
<ix:nonFraction contextRef="c457" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:StockIssuedDuringPeriodSharesNewIssues" scale="0" unitRef="shares" id="ixv-32671">27,963</ix:nonFraction> shares to officers related to their pledged shares discussed in Note 7.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Subsequent to September 30, 2024, the Company
has issued <ix:nonFraction contextRef="c13" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ExcessStockSharesIssued" scale="0" unitRef="shares" id="ixv-32672">260,000</ix:nonFraction> Class A Common shares to settle outstanding accrued payables of $<ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AccountsPayableCurrentAndNoncurrent" scale="0" unitRef="usd" id="ixv-32673">260,000</ix:nonFraction> and recognized a loss of approximately $<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:GainLossOnFairValueHedgesRecognizedInEarnings" scale="0" unitRef="usd" id="ixv-32674">76,000</ix:nonFraction>
for the difference in the fair value of the shares issued and the payables balance.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On October 18, 2024, the Company entered into
a consulting agreement with a third party for financing services on a month to month basis. &#160;As compensation for services the Company
will pay the consultant a fee of $<ix:nonFraction contextRef="c458" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PaymentsForBrokerageFees" scale="0" unitRef="usd" id="ixv-32675">20,000</ix:nonFraction> per month consisting of $<ix:nonFraction contextRef="c459" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:InvestmentsAndCash" scale="0" unitRef="usd" id="ixv-32676">5,000</ix:nonFraction> in cash and $<ix:nonFraction contextRef="c460" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:StockIssuedDuringPeriodValueIssuedForServices" scale="0" unitRef="usd" id="ixv-32677">15,000</ix:nonFraction> in Class A common shares based on the average
closing price for the last <ix:nonNumeric contextRef="c458" continuedAt="hnra_CommonStockClosingPriceTradingDays-c458_cont_1" format="ixt-sec:durwordsen" name="hnra:CommonStockClosingPriceTradingDays" id="ixv-32678">five</ix:nonNumeric> trading<ix:continuation id="hnra_CommonStockClosingPriceTradingDays-c458_cont_1"> days</ix:continuation> of the prior calendar month. To date the consultant has earned <ix:nonFraction contextRef="c459" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CommonStockSharesOutstanding" scale="0" unitRef="shares" id="ixv-32680">43,800</ix:nonFraction> shares under the agreement
that are not yet issued</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On October 18, 2024, the Company issued warrants
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provider for services provided to the Company.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On November 15, 2024, the Company entered into
a Confidential Rescission, Settlement, and Release Agreement with the FPA Seller whereby the parties mutually agreed to rescind the Forward
Purchase Agreement and related agreements between the parties, which a-s a result, any transactions, notices or other obligations thereunder
are void <i>ab initio</i>. The parties also agreed to release each other of all claims related to the Forward Purchase Agreement, and
in exchange for such release, the Company agreed to issue to the FPA Seller <ix:nonFraction contextRef="c462" decimals="0" format="ixt:num-dot-decimal" name="hnra:RestrictedCommonShares" scale="0" unitRef="shares" id="ixv-32684">450,000</ix:nonFraction> restricted Class A Common shares.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On November 21, 2024, the Company and White Lion
entered into</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On December 5, 2024, the Company entered into
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will repay an aggregate of $<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProceedsFromRepaymentsOfDebt" scale="0" unitRef="usd" id="ixv-32687">497,000</ix:nonFraction> on a weekly basis through March 2025.</p></ix:nonNumeric><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>


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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt"></p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="text-align: center; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>Up to 5,079,050 Shares of Class A Common Stock</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="text-transform: uppercase"><b>EON
RESOURCES INC.</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>CLASS A COMMON STOCK</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>PROSPECTUS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;, 2025</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

</div><!-- Field: Page; Sequence: 209 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="margin: 0pt">&#160;</p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt"></p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>PART II</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>INFORMATION NOT REQUIRED IN PROSPECTUS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Item 13. Other Expenses of Issuance and Distribution</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following table sets forth
the expenses expected to be incurred by us in connection with the issuance and distribution of the Class A Common Stock registered hereby,
all of which expenses, except for the Securities and Exchange Commission registration fee, are estimates:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="font-weight: bold; border-bottom: Black 1.5pt solid">Description</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Amount</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 88%; text-align: left">Securities and Exchange Commission registration fee</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">775</td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">Accounting fees and expenses</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">7,000</td><td style="text-align: left">*</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Legal fees and expenses</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">30,000</td><td style="text-align: left">*</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-bottom: 1.5pt">Miscellaneous fees and expenses</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">--</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 4pt; padding-left: 9pt">Total</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">37,775</td><td style="padding-bottom: 4pt; text-align: left">&#160;</td></tr>
  </table><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0in">&#160;</td>
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">*</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Estimated</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 20pt"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Item&#160;14. Indemnification of Directors and Officers.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Second A&amp;R Charter
provides that all of our directors, officers, employees and agents shall be entitled to be indemnified by us to the fullest extent permitted
by Section&#160;145 of the DGCL. Section&#160;145 of the DGCL concerning indemnification of officers, directors, employees and agents
is set forth below.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Section&#160;145. Indemnification of officers,
directors, employees and agents; insurance.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(a)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A corporation shall have power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys&#8217; fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with such action, suit or proceeding if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the person&#8217;s conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that the person&#8217;s conduct was unlawful.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-indent: -24pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(b)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A corporation shall have power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys&#8217; fees) actually and reasonably incurred by the person in connection with the defense or settlement of such action or suit if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-indent: -24pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(c)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">To the extent that a present or former director or officer of a corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in subsections (a)&#160;and (b)&#160;of this section, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys&#8217; fees) actually and reasonably incurred by such person in connection therewith.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-indent: -24pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(d)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Any indemnification under subsections (a)&#160;and (b)&#160;of this section (unless ordered by a court) shall be made by the corporation only as authorized in the specific case upon a determination that indemnification of the present or former director, officer, employee or agent is proper in the circumstances because the person has met the applicable standard of conduct set forth in subsections (a)&#160;and (b)&#160;of this section. Such determination shall be made, with respect to a person who is a director or officer at the time of such determination, (1)&#160;by a majority vote of the directors who are not parties to such action, suit or proceeding, even though less than a quorum, or (2)&#160;by a committee of such directors designated by majority vote of such directors, even though less than a quorum, or (3)&#160;if there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion, or (4)&#160;by the stockholders.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-indent: -24pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(e)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Expenses (including attorneys&#8217; fees) incurred by an officer or director in defending any civil, criminal, administrative or investigative action, suit or proceeding may be paid by the corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified by the corporation as authorized in this section. Such expenses (including attorneys&#8217; fees) incurred by former officers and directors or other employees and agents may be so paid upon such terms and conditions, if any, as the corporation deems appropriate.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-indent: -24pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(f)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The indemnification and advancement of expenses provided by, or granted pursuant to, the other subsections of this section shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in such person&#8217;s official capacity and as to action in another capacity while holding such office. A right to indemnification or to advancement of expenses arising under a provision of the certificate of incorporation or a bylaw shall not be eliminated or impaired by an amendment to such provision after the occurrence of the act or omission that is the subject of the civil, criminal, administrative or investigative action, suit or proceeding for which indemnification or advancement of expenses is sought, unless the provision in effect at the time of such act or omission explicitly authorizes such elimination or impairment after such action or omission has occurred.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-indent: -24pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(g)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person&#8217;s status as such, whether or not the corporation would have the power to indemnify such person against such liability under this section.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-indent: -24pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(h)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For purposes of this section, references to &#8220;the corporation&#8221; shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under this section with respect to the resulting or surviving corporation as such person would have with respect to such constituent corporation if its separate existence had continued.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">II-<span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->2<!-- Field: /Sequence --></span></p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(i)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For purposes of this section, references to &#8220;other enterprises&#8221; shall include employee benefit plans; references to &#8220;fines&#8221; shall include any excise taxes assessed on a person with respect to any employee benefit plan; and references to &#8220;serving at the request of the corporation&#8221; shall include any service as a director, officer, employee or agent of the corporation which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner such person reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner &#8220;not opposed to the best interests of the corporation&#8221; as referred to in this section.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(j)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The indemnification and advancement of expenses provided by, or granted pursuant to, this section shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-indent: -24pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(k)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The Court of Chancery is hereby vested with exclusive jurisdiction to hear and determine all actions for advancement of expenses or indemnification brought under this section or under any bylaw, agreement, vote of stockholders or disinterested directors, or otherwise. The Court of Chancery may summarily determine a corporation&#8217;s obligation to advance expenses (including attorneys&#8217; fees).</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Insofar as indemnification
for liabilities arising under the Securities Act may be permitted to our directors, officers, and controlling persons pursuant to the
foregoing provisions, or otherwise, we have been advised that, in the opinion of the SEC, such indemnification is against public policy
as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities
(other than the payment of expenses incurred or paid by a director, officer or controlling person in a successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we
will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to the court of appropriate jurisdiction
the question whether such indemnification by us is against public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In accordance with Section&#160;102(b)(7)
of the DGCL, the Second A&amp;R Charter provides that no director shall be personally liable to us or any of our stockholders for monetary
damages resulting from breaches of their fiduciary duty as directors, except to the extent such limitation on or exemption from liability
is not permitted under the DGCL. The effect of this provision of the Second A&amp;R Charter is to eliminate our rights and those of our
stockholders (through stockholders&#8217; derivative suits on our behalf) to recover monetary damages against a director for breach of
the fiduciary duty of care as a director, including breaches resulting from negligent or grossly negligent behavior, except, as restricted
by Section&#160;102(b)(7) of the DGCL. However, this provision does not limit or eliminate our rights or the rights of any stockholder
to seek nonmonetary relief, such as an injunction or rescission, in the event of a breach of a director&#8217;s duty of care.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If the DGCL is amended to
authorize corporate action further eliminating or limiting the liability of directors, then, in accordance with the Second A&amp;R Charter,
the liability of our directors to us or our stockholders will be eliminated or limited to the fullest extent authorized by the DGCL, as
so amended. Any repeal or amendment of provisions of the Second A&amp;R Charter limiting or eliminating the liability of directors, whether
by our stockholders or by changes in law, or the adoption of any other provisions inconsistent therewith, will (unless otherwise required
by law) be prospective only, except to the extent such amendment or change in law permits us to further limit or eliminate the liability
of directors on a retroactive basis.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Second A&amp;R Charter
also provides that we will, to the fullest extent authorized or permitted by applicable law, indemnify our current and former officers
and directors, as well as those persons who, while directors or officers of our corporation, are or were serving as directors, officers,
employees or agents of another entity, trust or other enterprise, including service with respect to an employee benefit plan, in connection
with any threatened, pending or completed proceeding, whether civil, criminal, administrative or investigative, against all expense, liability
and loss (including, without limitation, attorneys&#8217; fees, judgments, fines, ERISA excise taxes and penalties and amounts paid in
settlement) reasonably incurred or suffered by any such person in connection with any such proceeding. Notwithstanding the foregoing,
a person eligible for indemnification pursuant to the Second A&amp;R Charter will be indemnified by us in connection with a proceeding
initiated by such person only if such proceeding was authorized by our board of directors, except for proceedings to enforce rights to
indemnification.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">II-<span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->3<!-- Field: /Sequence --></span></p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The right to indemnification
which is conferred by the Second A&amp;R Charter is a contract right that includes the right to be paid by us the expenses incurred in
defending or otherwise participating in any proceeding referenced above in advance of its final disposition, provided, however, that if
the DGCL requires, an advancement of expenses incurred by our officer or director (solely in the capacity as an officer or director of
our corporation) will be made only upon delivery to us of an undertaking, by or on behalf of such officer or director, to repay all amounts
so advanced if it is ultimately determined that such person is not entitled to be indemnified for such expenses under the Second A&amp;R
Charter or otherwise.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The rights to indemnification
and advancement of expenses will not be deemed exclusive of any other rights which any person covered by the Second A&amp;R Charter may
have or hereafter acquire under law, the Second A&amp;R Charter, our bylaws, an agreement, vote of stockholders or disinterested directors,
or otherwise.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Any repeal or amendment of
provisions of the Second A&amp;R Charter affecting indemnification rights, whether by our stockholders or by changes in law, or the adoption
of any other provisions inconsistent therewith, will (unless otherwise required by law) be prospective only, except to the extent such
amendment or change in law permits us to provide broader indemnification rights on a retroactive basis, and will not in any way diminish
or adversely affect any right or protection existing at the time of such repeal or amendment or adoption of such inconsistent provision
with respect to any act or omission occurring prior to such repeal or amendment or adoption of such inconsistent provision. The Second
A&amp;R Charter also permits us, to the extent and in the manner authorized or permitted by law, to indemnify and to advance expenses
to persons other that those specifically covered by the Second A&amp;R Charter.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our bylaws include the provisions
relating to advancement of expenses and indemnification rights consistent with those which are set forth in the Second A&amp;R Charter.
In addition, our bylaws provide for a right of indemnity to bring a suit in the event a claim for indemnification or advancement of expenses
is not paid in full by us within a specified period of time. Our bylaws also permit us to purchase and maintain insurance, at our expense,
to protect us and/or any director, officer, employee or agent of our corporation or another entity, trust or other enterprise against
any expense, liability or loss, whether or not we would have the power to indemnify such person against such expense, liability or loss
under the DGCL.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Any repeal or amendment of
provisions of our bylaws affecting indemnification rights, whether by our board of directors, stockholders or by changes in applicable
law, or the adoption of any other provisions inconsistent therewith, will (unless otherwise required by law) be prospective only, except
to the extent such amendment or change in law permits us to provide broader indemnification rights on a retroactive basis, and will not
in any way diminish or adversely affect any right or protection existing thereunder with respect to any act or omission occurring prior
to such repeal or amendment or adoption of such inconsistent provision.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have entered into indemnification
agreements with each of our officers and directors a form of which is filed as Exhibit 10.21 to this registration statement. These agreements
require us to indemnify these individuals to the fullest extent permitted under Delaware law against liabilities that may arise by reason
of their service to us, and to advance expenses incurred as a result of any proceeding against them as to which they could be indemnified.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">II-<span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->4<!-- Field: /Sequence --></span></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt"></p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Item 15. <i>Recent Sales of Unregistered Securities</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Set forth below is information
regarding securities sold and issued by us in the past three years that were not registered under the Securities Act, as well as the consideration
received by us for such securities and information relating to the section of the Securities Act, or rule of the Securities and Exchange
Commission, under which exemption from registration was claimed.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In January 2023, we issued
50,000 warrants to a third-party having terms substantially similar to the Private Placement Warrants in connection with the receipt of
$50,000 in cash and the issuance of a promissory note.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In January 2023, we issued
10,000 warrants to a third-party having terms substantially similar to the Private Placement Warrants in connection with the receipt of
$10,000 in cash and the issuance of a promissory note.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In January 2023, we issued
75,000 warrants to a stockholder having terms substantially similar to the Private Placement Warrants in connection with the receipt of
$75,000 in cash and the issuance of a promissory note.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In January 2023, we issued
100,000 warrants to a third-party having terms substantially similar to the Private Placement Warrants in connection with the receipt
of $100,000 in cash and the issuance of a promissory note.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In January 2023, we issued
100,000 warrants to a stockholder having terms substantially similar to the Private Placement Warrants in connection with the receipt
of $100,000 in cash and the issuance of a promissory note.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In January 2023, we issued
50,000 warrants to a director nominee having terms substantially similar to the Private Placement Warrants in connection with the receipt
of $50,000 in cash and the issuance of a promissory note.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In February 2023, we issued
700,000 warrants to a stockholder controlled by a director having terms substantially similar to the Private Placement Warrants in connection
with the receipt of $700,000 in cash and the issuance of a promissory note.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In February 2023, we issued
179,000 warrants to a stockholder having terms substantially similar to the Private Placement Warrants in connection with the receipt
of $179,000 in cash and the issuance of a promissory note.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In March 2023, we issued 33,000
warrants to a stockholder controlled by a director having terms substantially similar to the Private Placement Warrants in connection
with the receipt of $33,000 in cash and the issuance of a promissory note.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In April 2023, we issued 67,000
warrants to a stockholder controlled by a director having terms substantially similar to the Private Placement Warrants in connection
with the receipt of $67,000 in cash and the issuance of a promissory note.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In April 2023, we issued 50,000
warrants to a third-party having terms substantially similar to the Private Placement Warrants in connection with the receipt of $50,000
in cash and the issuance of a promissory note.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><!-- Field: Page; Sequence: 214; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">II-<span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->5<!-- Field: /Sequence --></span></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt"></p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In May 2023, we issued 50,000
warrants to a stockholder controlled by a director having terms substantially similar to the Private Placement Warrants in connection
with the receipt of $67,000 in cash and the issuance of a promissory note.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In May 2023, we issued 15,000
warrants to a stockholder having terms substantially similar to the Private Placement Warrants in connection with the receipt of $15,000
in cash and the issuance of a promissory note.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In May 2023, we issued 100,000
warrants to a third-party having terms substantially similar to the Private Placement Warrants in connection with the receipt of $100,000
in cash and the issuance of a promissory note.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In May 2023, we issued 250,000
warrants to a third-party having terms substantially similar to the Private Placement Warrants in connection with the receipt of $250,000
in cash and the issuance of a promissory note.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In June 2023, we issued 150,000
warrants to a third-party having terms substantially similar to the Private Placement Warrants in connection with the receipt of $150,000
in cash and the issuance of a promissory note.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In July 2023, we issued 150,000
warrants to a third-party having terms substantially similar to the Private Placement Warrants in connection with the receipt of $150,000
in cash and the issuance of a promissory note.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In July 2023, we issued 50,000
warrants to a third-party having terms substantially similar to the Private Placement Warrants in connection with the receipt of $50,000
in cash and the issuance of a promissory note.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In July 2023, we issued 25,000
warrants to a stockholder having terms substantially similar to the Private Placement Warrants in connection with the receipt of $25,000
in cash and the issuance of a promissory note.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In July 2023, we issued 10,000
warrants to a third-party having terms substantially similar to the Private Placement Warrants in connection with the receipt of $10,000
in cash and the issuance of a promissory note.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In August 2023, we issued
50,000 warrants to a third-party having terms substantially similar to the Private Placement Warrants in connection with the receipt of
$50,000 in cash and the issuance of a promissory note.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In August 2023, we issued
150,000 warrants to a third-party having terms substantially similar to the Private Placement Warrants in connection with the receipt
of $150,000 in cash and the issuance of a promissory note.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In August 2023, we issued
100,000 warrants to a third-party having terms substantially similar to the Private Placement Warrants in connection with the receipt
of $100,000 in cash and the issuance of a promissory note.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In September 2023, we issued
50,000 warrants to a third-party having terms substantially similar to the Private Placement Warrants in connection with the receipt of
$50,000 in cash and the issuance of a promissory note.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In September 2023, we issued
20,000 warrants to a third-party having terms substantially similar to the Private Placement Warrants in connection with the receipt of
$20,000 in cash and the issuance of a promissory note.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In October 2023, we issued
875,000&#160;warrants to a third-party having terms substantially similar to the Private Placement Warrants in connection with the receipt
of $875,000&#160;in cash and the issuance of a promissory note.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In October 2023, we&#160;issued
100,000&#160;warrants&#160;to a third-party having terms substantially similar to the Private Placement Warrants in connection with the
receipt of&#160;$100,000&#160;in cash&#160;and the issuance of a promissory note.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In October 2023, we&#160;issued
500,000&#160;warrants&#160;to a third-party having terms substantially similar to the Private Placement Warrants in connection with the
receipt of&#160;$500,000&#160;in cash&#160;and the issuance of a promissory note.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt"></p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In October 2023, we&#160;issued
50,000&#160;warrants&#160;to a third-party having terms substantially similar to the Private Placement Warrants in connection with the
receipt of&#160;$50,000&#160;in cash&#160;and the issuance of a promissory note.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In October 2023, we&#160;issued
50,000&#160;warrants&#160;to a third-party having terms substantially similar to the Private Placement Warrants in connection with the
receipt of&#160;$50,000&#160;in cash&#160;and the issuance of a promissory note.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In October 2023, we&#160;issued
125,000&#160;warrants&#160;to a third-party having terms substantially similar to the Private Placement Warrants in connection with the
receipt of&#160;$125,000&#160;in cash&#160;and the issuance of a promissory note.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In October 2023, we&#160;issued
50,000&#160;warrants&#160;to a third-party having terms substantially similar to the Private Placement Warrants in connection with the
receipt of&#160;$50,000&#160;in cash&#160;and the issuance of a promissory note.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In November 2023, we&#160;issued
600,000&#160;warrants&#160;to a third-party having terms substantially similar to the Private Placement Warrants in connection with the
receipt of&#160;$600,000&#160;in cash&#160;and the issuance of a promissory note.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In November 2023, we&#160;issued
500,000&#160;warrants&#160;to a third-party having terms substantially similar to the Private Placement Warrants in connection with the
receipt of&#160;$500,000&#160;in cash&#160;and the issuance of a promissory note.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In November 2023, we&#160;issued
250,000&#160;warrants&#160;to a third-party having terms substantially similar to the Private Placement Warrants in connection with the
receipt of&#160;$250,000&#160;in cash&#160;and the issuance of a promissory note.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In November 2023, we&#160;issued
50,000&#160;warrants&#160;to a third-party having terms substantially similar to the Private Placement Warrants in connection with the
receipt of&#160;$50,000&#160;in cash&#160;and the issuance of a promissory note.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In November 2023, we&#160;issued
200,000&#160;warrants&#160;to a third-party having terms substantially similar to the Private Placement Warrants in connection with the
receipt of&#160;$200,000&#160;in cash&#160;and the issuance of a promissory note.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In November 2023, we&#160;issued
250,000&#160;warrants&#160;to a third-party having terms substantially similar to the Private Placement Warrants in connection with the
receipt of&#160;$250,000&#160;in cash&#160;and the issuance of a promissory note.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></p><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">II-<span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->7<!-- Field: /Sequence --></span></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt"></p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In November 2023, we entered
agreements with (i) Meteora Capital Partners, LP (&#8220;MCP&#8221;), (ii) Meteora Select Trading Opportunities Master, LP (&#8220;MSTO&#8221;),
and (iii) Meteora Strategic Capital, LLC (&#8220;MSC&#8221; and, collectively with MCP and MSTO,&#160;&#8220;Meteora&#8221;), pursuant
to which Meteora agreed to reverse the redemption of up to the lesser of (i) 600,000 shares of Class A Common Stock, and (ii) such number
of shares of Class A Common Stock such that the number of shares beneficially owned by Meteora and its affiliates and any other persons
whose beneficial ownership of Class A Common Stock would be aggregated with those of Meteora for purposes of Section 13(d) of the Exchange
Act, does not exceed 9.99% of the total number of issued and outstanding shares of Class A Common Stock. In addition, Meteora agreed to
subscribe for and purchase, and we agreed to issue and sell to Meteora, on the Closing Date, shares of Class A Common Stock, less the
number of shares of Class A Common Stock purchased by Meteora separately from third parties through a broker in the open market.&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On November 13, 2023, we entered
into exchange agreements (&#8220;Exchange Agreements&#8221;) with certain holders (the &#8220;Noteholders&#8221;) of promissory notes
issued by us for working capital purposes which accrued interest at a rate of 15% per annum (the &#8220;Notes&#8221;). Pursuant to the
Exchange Agreements, we agreed to exchange, in consideration of the surrender and termination of the Notes in an aggregate principal amount
(including interest accrued thereon) of $2,257,771, for 451,563 shares of Class A Common Stock at a price per share equal to $5.00 per
share.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In connection with a Referral
Fee and Consulting Agreement (the &#8220;Consulting Agreement&#8221;) by and between us and Alexandria VMA Capital, LLC, an entity controlled
by Dante Caravaggio, our Chief Executive Officer, President, and member of our Board of Directors (&#8220;Consultant&#8221;), we issued
89,000 shares of Class A Common Stock to Consultant in connection with the closing of the Purchase as consideration for services rendered.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In connection with the Closing
of the Purchase, we issued to two employees 10,000 shares of Class A Common Stock each.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Upon the Closing of the Purchase,
we issued 2,000,000 shares of Class B Common Stock, 2,000,000 OpCo Class B Units, and 1,500,000 OpCo Preferred Units to Seller as consideration
for the Purchase. In addition, we issued to the Seller 10,000 shares of Class A Common Stock as consideration for the Option Agreement.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In March 2024, we&#160;issued
50,000&#160;warrants&#160;to a third-party having terms substantially similar to the private placement warrants in connection with the
receipt of&#160;$50,000&#160;in cash&#160;and the issuance of a promissory note.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In March 2024, we&#160;issued
100,000&#160;warrants&#160;to a third-party having terms substantially similar to the private placement warrants in connection with the
receipt of&#160;$100,000&#160;in cash&#160;and the issuance of a promissory note.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In March 2024, we&#160;issued
50,000&#160;warrants&#160;to a third-party having terms substantially similar to the private placement warrants in connection with the
receipt of&#160;$50,000&#160;in cash&#160;and the issuance of a promissory note.&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In March 2024, we issued 40,000
RSUs to a director for services. The RSUs vest 1/3 on November 15, 2024, 1/3 on November 15, 2025, and 1/3 on November 15, 2026. We also
issued 37,500 RSUs to such director that vest on November 15, 2024.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><!-- Field: Page; Sequence: 217; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">II-<span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->8<!-- Field: /Sequence --></span></p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In March 2024, we issued 37,000
RSUs to a director for services. The RSUs vest 1/3 on November 15, 2024, 1/3 on November 15, 2025, and 1/3 on November 15, 2026. We also
issued 37,500 RSUs to such director that vest on November 15, 2024.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In March 2024, we issued 35,000
RSUs to a director for services. The RSUs vest 1/3 on November 15, 2024, 1/3 on November 15, 2025, and 1/3 on November 15, 2026. We also
issued 37,500 RSUs to such director that vest on November 15, 2024.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In March 2024, we issued 50,000
RSUs to our Chief Executive Officer for services. The RSUs vest 1/3 on November 15, 2024, 1/3 on November 15, 2025, and 1/3 on November
15, 2026.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In March 2024, we issued 50,000
RSUs to our Chief Financial Officer for services. The RSUs vest 1/3 on November 15, 2024, 1/3 on November 15, 2025, and 1/3 on November
15, 2026.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In March 2024, we issued 50,000
RSUs to our General Counsel for services. The RSUs vest 1/3 on November 15, 2024, 1/3 on November 15, 2025, and 1/3 on November 15, 2026.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In March 2024, we issued 40,000
RSUs to an officer for services. The RSUs vest 1/3 on November 15, 2024, 1/3 on November 15, 2025, and 1/3 on November 15, 2026.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In March 2024, we issued 35,000
RSUs to an officer for services. The RSUs vest 1/3 on November 15, 2024, 1/3 on November 15, 2025, and 1/3 on November 15, 2026.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In March 2024, we issued 35,000
RSUs to a former officer for services. The RSUs vested on issuance.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In March 2024, we issued 60,000
RSUs to a consultant for services. The RSUs vest on November 15, 2024.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In March 2024, we issued 30,000
RSUs to a consultant for services. The RSUs vest on November 15, 2024.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In March 2024, we&#160;issued
100,000&#160;warrants&#160;to our Vice President of Finance and Administration having terms substantially similar to the private placement
warrants in connection with the receipt of&#160;$100,000&#160;in cash&#160;and the issuance of a promissory note.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In April 2024, we&#160;issued
100,000&#160;warrants&#160;to our Chief Financial Officer having terms substantially similar to the private placement warrants in connection
with the receipt of&#160;$100,000&#160;in cash&#160;and the issuance of a promissory note.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In May 2024, we issued 100,000
warrants to a stockholder controlled by a director having terms substantially similar to the private placement warrants in connection
with the receipt of $100,000 in cash and the issuance of a promissory note.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">II-<span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->9<!-- Field: /Sequence --></span></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt"></p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In October 2024, we issued
27,963 shares of Class A Common Stock (the &#8220;Pledge Shares&#8221;) issued to certain Selling Securityholders in connection with their
agreement to pledge equity in favor of First International Bank &amp; Trust (&#8220;FIBT&#8221;).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In October 2024, we issued
75,000 shares of Class A Common Stock in connection with fees owed for consulting services.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In October 2024, we issued
60,000 shares of Class A Common Stock in connection with a separation and release effective December 17, 2023.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In October 2024, we issued
150,000 shares of Class A Common Stock in connection with a settlement and mutual release agreement effective May 6, 2024.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In October 2024, we issued
a warrant to purchase 1,200,000 shares of Class A Common in connection with the forgiveness of certain accounts payable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In October 2024, we issued
100,000 shares of Class A Common Stock in connection with the forgiveness of $100,000 of accounts payable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In October 2024, we issued
50,000 shares of Class A Common Stock in connection with the forgiveness of $50,000 of accounts payable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In October 2024, we issued
30,000 shares of Class A Common Stock in connection with the forgiveness of $30,000 of accounts payable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In October 2024, we issued
80,000 shares of Class A Common Stock in connection with the forgiveness of $80,000 of accounts payable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In January 2025, we issued
24,000 shares in connection with the forgiveness of $24,000 of accounts payable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In January 2025, we issued
24,000 shares in connection with the forgiveness of $45,050 of accounts payable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In January 2025, we issued
10,000 shares in connection with the provision of targeting and research services.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">All issuances described above
were not registered under the Securities Act in reliance upon the exemption provided in Section 3(a)(9) and/or 4(a)(2) of the Securities
Act and/or Regulation D promulgated thereunder.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">II-<span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->10<!-- Field: /Sequence --></span></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt"></p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Item&#160;16. Exhibits and Financial Statement Schedules.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-indent: -24pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(a)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Exhibits. The list of exhibits immediately preceding the signature page of this registration statement is incorporated herein by reference.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-indent: -24pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(b)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Financial Statements. See page F-1&#160;for an index to the financial statements and schedules included in the registration statement.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Item 17. <i>Undertakings</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Insofar as indemnification
for liabilities arising under the Securities Act of 1933, as amended, or the Securities Act, may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication
of such issue.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The undersigned registrant hereby undertakes:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(1)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-indent: -24pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 72px">&#160;</td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(i)</span></td>
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">To include any prospectus required by section 10(a)(3) of the Securities Act of 1933;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -24pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 72px">&#160;</td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(ii)</span></td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -24pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 72px">&#160;</td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(iii)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -24pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(2)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(3)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-indent: -24pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-indent: -24pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 72px">&#160;</td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(i)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -24pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 72px">&#160;</td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -24pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(5)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">That, for the purpose of determining liability of the registrant under the Securities Act to any purchaser in the initial distribution of the securities: the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-indent: -24pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 72px">&#160;</td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(i)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -24pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 72px">&#160;</td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(ii)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -24pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 72px">&#160;</td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(iii)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -24pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 72px">&#160;</td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(iv)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -24pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(6)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Provide to the underwriter at the closing specified in the underwriting agreements certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-indent: -24pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(7)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b) (1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-indent: -24pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(8)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">II-<span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->12<!-- Field: /Sequence --></span></p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>EXHIBIT INDEX</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: bottom">
    <td style="width: 9%; border-bottom: black 1.5pt solid"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Exhibit Number&#160;</b></span></td>
    <td style="width: 1%">&#160;</td>
    <td style="width: 90%; border-bottom: black 1.5pt solid; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Exhibit Description</b></span></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">2.1</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><a href="http://www.sec.gov/Archives/edgar/data/1842556/000121390023072140/ea184364ex2-1_hnracq.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Amended and Restated Membership Interest Purchase Agreement, dated as of August 28, 2023, by and among Buyer, Seller, and Sponsor (filed as Exhibit 2.1 to the Company&#8217;s Current Report on form 8-K filed on August 30, 2023 and incorporated herein by reference).</span></a></td></tr>
  <tr style="vertical-align: top; ">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">2.2</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><a href="http://www.sec.gov/Archives/edgar/data/1842556/000121390023089273/ea188693ex2-2_hnracq.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Amendment No. 1 to the Amended and Restated Membership Interest Purchase Agreement, dated November 15, 2023, by and among Buyer, Seller, and Sponsor (filed as Exhibit 2.2 to the Company&#8217;s Current Report on Form 8-K, filed on November 21, 2023 and incorporated herein by reference).</span></a></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">2.3</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><a href="http://www.sec.gov/Archives/edgar/data/1842556/000121390023089273/ea188693ex2-3_hnracq.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Letter Agreement between Buyer and Seller Re: Settle Up between Parties, dated November 15, 2023 (filed as Exhibit 2.3 to the Company&#8217;s Current Report on Form 8-K filed on November 21, 2023 and incorporated herein by reference).</span></a></td></tr>
  <tr style="vertical-align: top; ">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">3.1</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><a href="http://www.sec.gov/Archives/edgar/data/1842556/000121390023089273/ea188693ex3-1_hnracq.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Second Amended and Restated Certificate of Incorporation of the Company, filed with the Secretary of State of the State of Delaware (filed as Exhibit 3.1 to the Company&#8217;s Current Report on Form 8-K filed on November 21, 2023 and incorporated herein by reference).</span></a></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">3.2</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><a href="http://www.sec.gov/Archives/edgar/data/1842556/000121390024079881/ea021456201ex3-1_eonres.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Certificate of Amendment to Certificate of Incorporation, as filed with the Secretary of State of the State of Delaware on September 16, 2024 (filed as Exhibit 3.1 to the Company&#8217;s Current Report on Form 8-K filed on September 18, 2024, and incorporated herein by reference)</span></a></td></tr>
  <tr style="vertical-align: top; ">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">3.3</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><a href="http://www.sec.gov/Archives/edgar/data/1842556/000121390024079881/ea021456201ex3-2_eonres.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Amended and Restated Bylaws of the Company, effective September 17, 2024 (filed as Exhibit 3.2 to the Company&#8217;s Current Report on Form 8-K filed on September 18, 2024, and incorporated herein by reference)</span></a></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">3.4</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1842556/000121390024102831/ea022257601ex3-1_eonresour.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Amendment No. 1 to the Amended and Restated Bylaws of the Company, effective November 26, 2024 (filed as Exhibit 3.1 to the Company&#8217;s Current Report on Form 8-K filed on November 26, 2024, and incorporated herein by reference)</span></a></td></tr>
  <tr style="vertical-align: top; ">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.1</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><a href="http://www.sec.gov/Archives/edgar/data/1842556/000121390022020181/f10k2021ex4-1_hnracq.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Warrant Agreement between Continental Stock Transfer &amp; Trust Company and the Company (filed as Exhibit 4.1 to the Company&#8217;s Annual Report on Form 10-K filed on April 15, 2022 and incorporated herein by reference).</span></a></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.2</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><a href="http://www.sec.gov/Archives/edgar/data/1842556/000121390024039259/ea020347501ex4-2_hnracq.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Description of Registrant&#8217;s Securities (filed as Exhibit 4.2 to the Company&#8217;s Annual Report on Form 10-K filed on May 3, 2024 and incorporated herein by reference).</span></a></td></tr>
  <tr style="vertical-align: top; ">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.3</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1842556/000121390024089105/ea021803201ex4-1_eonresour.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Warrant issued by EON Resources Inc. to Pryor Cashman LLP, dated October 18, 2024 (filed as Exhibit 4.1 to the Company&#8217;s Current Report on Form 8-K filed on October 21, 2024 and incorporated herein by reference).</span></a></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">5.1*</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><a href="ea022812701ex5-1_eonres.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Opinion of Pryor Cashman LLP</span></a></td></tr>
  <tr style="vertical-align: top; ">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.1</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><a href="http://www.sec.gov/Archives/edgar/data/1842556/000121390022020181/f10k2021ex10-1_hnracq.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Insider Letter between the Company and each of its executive officers, directors, HNRAC Sponsors LLC and its permitted transferees (incorporated by reference to Exhibit 10.1 to the Annual Report on Form 10-K filed by the Registrant on April 15, 2022).</span></a></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.2</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><a href="http://www.sec.gov/Archives/edgar/data/1842556/000121390022020181/f10k2021ex10-2_hnracq.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Investment Management Trust Agreement between Continental Stock Transfer &amp; Trust Company and the Company (incorporated by reference to Exhibit 10.2 to the Annual Report on Form 10-K filed by the Registrant on April 15, 2022).</span></a></td></tr>
  <tr style="vertical-align: top; ">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.3</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><a href="http://www.sec.gov/Archives/edgar/data/1842556/000121390022020181/f10k2021ex10-4_hnracq.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Securities Subscription Agreement (founder shares), dated December 24, 2020, between the Company and HNRAC Sponsors LLC (incorporated by reference to Exhibit 10.4 to the Annual Report on Form 10-K filed by the Registrant on April 15, 2022).</span></a></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.4</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><a href="http://www.sec.gov/Archives/edgar/data/1842556/000121390022020181/f10k2021ex10-5_hnracq.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Unit Subscription Agreement between the Company and HNRAC Sponsors LLC (private placement units) (incorporated by reference to Exhibit 10.5 to the Annual Report on Form 10-K filed by the Registrant on April 15, 2022).</span></a></td></tr>
  <tr style="vertical-align: top; ">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.5</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><a href="http://www.sec.gov/Archives/edgar/data/1842556/000121390022020181/f10k2021ex10-7_hnracq.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Administrative Services Agreement by and between the Company and HNRAC Sponsors LLC (incorporated by reference to Exhibit 10.7 to the Annual Report on Form 10-K filed by the Registrant on April 15, 2022).</span></a></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.6</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><a href="http://www.sec.gov/Archives/edgar/data/1842556/000121390022020181/f10k2021ex10-8_hnracq.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Services Agreement, dated April 11, 2022, by and between Company and Houston Natural Resources, Inc. (incorporated by reference to Exhibit 10.8 to the Annual Report on Form 10-K filed by the Registrant on April 15, 2022).</span></a></td></tr>
  <tr style="vertical-align: top; ">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.7</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><a href="http://www.sec.gov/Archives/edgar/data/1842556/000121390023000470/ea171103ex10-1_hnracq.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Form of SPAC Stockholder Support Agreement, dated as of December 27, 2022, by and between the Company and SPAC Stockholder (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by the Registrant on January 3, 2023).</span></a></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.8</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><a href="http://www.sec.gov/Archives/edgar/data/1842556/000121390022065580/ea167420ex10-1_hnracq.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Common Stock Purchase Agreement, dated as of October 17, 2022, by and between the Company and White Lion Capital LLC (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K as filed by the Registrant on October 21, 2022)</span></a></td></tr>
  <tr style="vertical-align: top; ">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.9</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><a href="http://www.sec.gov/Archives/edgar/data/1842556/000121390022065580/ea167420ex10-2_hnracq.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Registration Rights Agreement, dated as of October 17, 2022, by and between the Company and White Lion Capital LLC (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K as filed by the Registrant on October 21, 2022).</span></a></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.10</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><a href="http://www.sec.gov/Archives/edgar/data/1842556/000121390023089273/ea188693ex10-1_hnracq.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Amended and Restated Limited Liability Company Agreement of HNRA Upstream, LLC by and among HNRA Upstream, LLC, Pogo Royalty, LLC, and the Company, dated November 15, 2023 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by the Registrant on November 21, 2023).</span></a></td></tr>
  <tr style="vertical-align: top; ">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.11&#8224;</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><a href="http://www.sec.gov/Archives/edgar/data/1842556/000121390023089273/ea188693ex10-8_hnracq.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Senior Secured Term Loan Agreement, dated November 15, 2023, by and among First International Bank &amp; Trust, the Company, HNRA Upstream, LLC, HNRA Partner, Inc., Pogo Resources, LLC, and LH Operating, LLC (incorporated by reference to Exhibit 10.8 to the Current Report on Form 8-K filed by the Registrant on November 21, 2023).</span></a></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.12</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><a href="http://www.sec.gov/Archives/edgar/data/1842556/000121390023089273/ea188693ex10-9_hnracq.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Security Agreement, dated November 15, 2023, by and among First International Bank &amp; Trust, the Company, HNRA Upstream, LLC, HNRA Partner, Inc., Pogo Resources, LLC, and LH Operating, LLC (incorporated by reference to Exhibit 10.9 to the Current Report on Form 8-K filed by the Registrant on November 21, 2023).</span></a></td></tr>
  <tr style="vertical-align: top; ">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.13</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><a href="http://www.sec.gov/Archives/edgar/data/1842556/000121390023083018/ea187496ex10-1_hnracq.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Form of Forward Purchase Agreement (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by the Registrant on November 3, 2023).</span></a></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.14</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><a href="http://www.sec.gov/Archives/edgar/data/1842556/000121390023083018/ea187496ex10-2_hnracq.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Form of FPA Funding Amount PIPE Subscription Agreement (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed by the Registrant on November 3, 2023).</span></a></td></tr>
  <tr style="vertical-align: top; ">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.15</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><a href="http://www.sec.gov/Archives/edgar/data/1842556/000121390023086171/ea188175ex10-1_hnracq.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Form of Non-Redemption Agreement (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by the Registrant on November 13, 2023).</span></a></td></tr>
  </table><div>
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</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top; background-color: #CCEEFF">
    <td style="width: 9%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.16</span></td>
    <td style="width: 1%">&#160;</td>
    <td style="width: 90%; text-align: justify"><a href="http://www.sec.gov/Archives/edgar/data/1842556/000121390023086171/ea188175ex10-2_hnracq.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Form of Exchange Agreement (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed by the Registrant on November 13, 2023).</span></a></td></tr>
  <tr style="vertical-align: top">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.17</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><a href="http://www.sec.gov/Archives/edgar/data/1842556/000121390021067782/fs12021a1ex10-6_hnracq.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Form of Indemnification Agreement (incorporated by reference to Exhibit 10.6 to the Registration Statement on Form S-1 filed by the Registrant on December 28, 2021).</span></a></td></tr>
  <tr style="vertical-align: top; background-color: #CCEEFF">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.18</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><a href="http://www.sec.gov/Archives/edgar/data/1842556/000121390023089273/ea188693ex10-11_hnracq.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">2023 HNR Acquisition Corp Omnibus Incentive Plan (incorporated by reference to Exhibit 10.11 to the Current Report on Form 8-K filed by the Registrant on November 21, 2023).</span></a></td></tr>
  <tr style="vertical-align: top">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.19</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><a href="http://www.sec.gov/Archives/edgar/data/1842556/000121390023089273/ea188693ex10-10_hnracq.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Guaranty Agreement, dated as of November 15, 2023 (incorporated by reference to Exhibit 10.10 to the Current Report on Form 8-K filed by the Registrant on November 21, 2023).</span></a><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;&#160;</span></td></tr>
  <tr style="vertical-align: top; background-color: #CCEEFF">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.20</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><a href="http://www.sec.gov/Archives/edgar/data/1842556/000121390023089273/ea188693ex10-2_hnracq.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Promissory Note, dated November 15, 2023 (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed by the Registrant on November 21, 2023).</span></a><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;&#160;</span></td></tr>
  <tr style="vertical-align: top">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.21</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><a href="http://www.sec.gov/Archives/edgar/data/1842556/000121390023089273/ea188693ex10-3_hnracq.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Registration Rights Agreement, dated November 15, 2023 between the Registrant and certain security holders (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K filed by the Registrant on November 21, 2023).</span></a></td></tr>
  <tr style="vertical-align: top; background-color: #CCEEFF">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.22</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><a href="http://www.sec.gov/Archives/edgar/data/1842556/000121390023089273/ea188693ex10-4_hnracq.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Option Agreement, dated as of November 15, 2023 (incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K filed by the Registrant on November 21, 2023).</span></a></td></tr>
  <tr style="vertical-align: top">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.23</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><a href="http://www.sec.gov/Archives/edgar/data/1842556/000121390023089273/ea188693ex10-5_hnracq.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Director Nomination and Board Observer Agreement, dated as of November 15, 2023, by and between the Company and CIC Pogo LP, (incorporated by reference to Exhibit 10.5 to the Current Report on Form 8-K filed by the Registrant on November 21, 2023).</span></a></td></tr>
  <tr style="vertical-align: top; background-color: #CCEEFF">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.24</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><a href="http://www.sec.gov/Archives/edgar/data/1842556/000121390023089273/ea188693ex10-6_hnracq.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Backstop Agreement, dated as of November 15, 2023 (incorporated by reference to Exhibit 10.6 to the Current Report on Form 8-K filed by the Registrant on November 21, 2023).</span></a></td></tr>
  <tr style="vertical-align: top">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.25</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><a href="http://www.sec.gov/Archives/edgar/data/1842556/000121390023089273/ea188693ex10-7_hnracq.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Founder Pledge Agreement, dated as of November 15, 2023 (incorporated by reference to Exhibit 10.7 to the Current Report on Form 8-K filed by the Registrant on November 21, 2023).</span></a></td></tr>
  <tr style="vertical-align: top; background-color: #CCEEFF">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.26</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><a href="http://www.sec.gov/Archives/edgar/data/1842556/000121390023076396/ea185106ex1-1_hnracq.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Satisfaction and Discharge of Indebtedness pursuant to Underwriting Agreement, dated September 7, 2023, by and between the Company and EF Hutton, a division of Benchmark Investments, LLC (incorporated by reference to Exhibit 1.1 to the Current Report on Form 8-K filed by the Registrant on September 13, 2023).</span></a></td></tr>
  <tr style="vertical-align: top">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.27</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><a href="http://www.sec.gov/Archives/edgar/data/1842556/000121390024008738/ea192389ex10-1_hnracq.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Executive Employment Agreement, dated January 29, 2024, by and between the Company and Mark Williams (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by the Registrant on February 1, 2024).</span></a></td></tr>
  <tr style="vertical-align: top; background-color: #CCEEFF">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.28</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><a href="http://www.sec.gov/Archives/edgar/data/1842556/000121390023097161/ea190314ex10-1_hnracq.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Separation and Release Agreement, dated December 17, 2023, by and between the Company and Diego Rojas (incorporated by reference to Exhibit 10.1 on the Current Report on Form 8-K filed by the Registrant on December 20, 2023).</span></a></td></tr>
  <tr style="vertical-align: top">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.29</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><a href="http://www.sec.gov/Archives/edgar/data/1842556/000121390023097161/ea190314ex10-2_hnracq.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Executive Employment Agreement, dated December 18, 2023, by and between the Company and Dante Caravaggio (incorporated by reference to Exhibit 10.2 on the Current Report on Form 8-K filed by the Registrant on December 20, 2023).</span></a></td></tr>
  <tr style="vertical-align: top; background-color: #CCEEFF">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.30</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><a href="http://www.sec.gov/Archives/edgar/data/1842556/000121390024020613/ea0201302ex10-1_hnracq.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Amendment No.1 to the Common Stock Purchase Agreement, dated March 7, 2024, by and between the Company and White Lion Capital, LLC (incorporated by reference to Exhibit 10.1 on the Current Report on Form 8-K filed by the Registrant on March 7, 2024).</span></a></td></tr>
  <tr style="vertical-align: top">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.31</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1842556/000121390024057751/ea020831001ex10-31_hnracq.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Employment Agreement, dated December 13, 2023, by and between the Company and Mitchell B. Trotter (incorporated by reference to Exhibit 10.31 to the Company&#8217;s Registrant Statement on Form S-1/A filed on August 5, 2024).</span></a></td></tr>
  <tr style="vertical-align: top; background-color: #CCEEFF">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.32</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1842556/000121390024057751/ea020831001ex10-32_hnracq.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Employment Agreement, dated December 13, 2023, by and between the Company and David M. Smith &#160;(incorporated by reference to Exhibit 10.32 to the Company&#8217;s Registrant Statement on Form S-1/A filed on August 5, 2024).</span></a></td></tr>
  <tr style="vertical-align: top">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.33</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1842556/000121390024054031/ea0208075ex10-1_hnracq.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Amendment No. 2 to Common Stock Purchase Agreement between the Company and White Lion Capital LLC, dated June 17, 2024 (incorporated by reference to Exhibit 10.1 to the Company&#8217;s Current Report on Form 8-K filed by the Registrant on June 20, 2024).</span></a></td></tr>
  <tr style="vertical-align: top; background-color: #CCEEFF">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">16.1</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><a href="http://www.sec.gov/Archives/edgar/data/1842556/000121390022020181/f10k2021ex16-1_hnracq.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Auditor Letter (incorporated by reference to Exhibit 16.1 to the Annual Report on Form 10-K filed by the Registrant on April 15, 2022).</span></a></td></tr>
  <tr style="vertical-align: top">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">23.1*</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><a href="ea022812701ex23-1_eonres.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Consent of Marcum LLP regarding financial statements of EON Resources Inc.</span></a></td></tr>
  <tr style="vertical-align: top; background-color: #CCEEFF">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">23.2*</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><a href="ea022812701ex5-1_eonres.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Consent of Pryor Cashman LLP (included on Exhibit 5.1)</span></a></td></tr>
  <tr style="vertical-align: top">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">23.3*</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="ea022812701ex23-3_eonres.htm">Consent of William M. Cobb &amp; Associates, Inc.</a></span></td></tr>
  <tr style="vertical-align: top; background-color: #CCEEFF">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">99.1</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><a href="http://www.sec.gov/Archives/edgar/data/1842556/000101376223003769/defm14a1023_hnracqcorp.htm#T604"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Report of William M. Cobb &amp; Associates, Inc. as of December 31, 2022 (LH Operating, LLC), updated June 30, 2023, which excludes the 10% overriding royalty interest not acquired in the amended transaction (incorporated by reference to Annex E to the Company&#8217;s Definitive Proxy Statement on Schedule 14A as filed with the SEC on October 13, 2023).</span></a></td></tr>
  <tr style="vertical-align: top">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">99.2</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><a href="http://www.sec.gov/Archives/edgar/data/1842556/000101376223003769/defm14a1023_hnracqcorp.htm#T7788"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Report of William M. Cobb &amp; Associates, Inc, as of December 31, 2022 (LH Operating, LLC), updated June 30, 2023, which includes the 10% overriding royalty interest not acquired in the amended transaction (incorporated by reference to Annex G to the Company&#8217;s Definitive Proxy Statement on Schedule 14A as filed with the SEC on October 13, 2023).</span></a></td></tr>
  <tr style="vertical-align: top; background-color: #CCEEFF">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">99.3</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1842556/000121390024039259/ea020347501ex99-1_hnracq.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Report of William M. Cobb &amp; Associates, Inc, as of December 31, 2023 (LH Operating, LLC), which excludes the 10% overriding royalty interest not acquired in the amended transaction (incorporated by reference to Exhibit 99.1 to the Annual Report on Form 10-K filed by the Registrant on May 3, 2024).</span></a></td></tr>
  <tr style="vertical-align: top">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">101.INS</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Inline XBRL Instance Document</span></td></tr>
  <tr style="vertical-align: top; background-color: #CCEEFF">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">101.CAL</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Inline XBRL Taxonomy Extension Calculation Linkbase Document</span></td></tr>
  <tr style="vertical-align: top">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">101.SCH</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Inline XBRL Taxonomy Extension Schema Document</span></td></tr>
  <tr style="vertical-align: top; background-color: #CCEEFF">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">101.DEF</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Inline XBRL Taxonomy Extension Definition Linkbase Document</span></td></tr>
  <tr style="vertical-align: top">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">101.LAB</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Inline XBRL Taxonomy Extension Labels Linkbase Document</span></td></tr>
  <tr style="vertical-align: top; background-color: #CCEEFF">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">101.PRE</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Inline XBRL Taxonomy Extension Presentation Linkbase Document</span></td></tr>
  <tr style="vertical-align: top">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">104</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).</span></td></tr>
  <tr style="vertical-align: top; background-color: #CCEEFF">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">107*</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><a href="ea022812701ex-fee_eonres.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Filing Fee Table</span></a></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;<b>&#160;</b></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0in"/><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">*</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Filed
herewith.</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In accordance with the requirements
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{"company-data": {"conformed-name": "EON Resources Inc.", "cik": "0001842556", "assigned-sic": "1311", "organization-name": "01 Energy & Transportation", "irs-number": "854359124", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-1", "act": "33", "file-number": "333-284447", "film-number": "25551552"}, "business-address": {"street1": "3730 KIRBY DRIVE, SUITE 1200", "city": "HOUSTON", "state": "TX", "zip": "77098", "phone": "713.834.1145"}, "mail-address": {"street1": "3730 KIRBY DRIVE, SUITE 1200", "city": "HOUSTON", "state": "TX", "zip": "77098"}, "former-company": {"former-conformed-name": "HNR Acquisition Corp.", "date-changed": "20210126"}}
As filed with the Securities
and Exchange Commission on January 23, 2025
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
S-1
REGISTRATION STATEMENT
Under
The Securities Act of 1933
EON Resources Inc.
(Exact name of Registrant as specified in its charter)
Delaware
1311
85-4359124
(State or other jurisdiction of
(Primary Standard Industrial
(IRS Employer
incorporation or organization)
Classification Code Number)
Identification No.)
3730 Kirby Drive, Suite 1200
Houston, TX
(713) 834-1145
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
Dante Caravaggio
Chief Executive Officer
3730 Kirby Drive, Suite 1200
Houston, TX
(713) 834-1145
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
Please send copies of all communications to:
Matthew Ogurick, Esq.
Pryor Cashman LLP
7 Times Square
New York, New York 10036
(212) 421-4100
Approximate date of commencement of proposed
sale to the public:
As soon as practicable after the effective date
of this Registration Statement.
If any of the securities being
registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, check the following
box: ☒
If this Form is filed to register
additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective
amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective
amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same offering. ☐
Indicate by check mark whether
the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging
growth company. See the definitions of "large accelerated filer", "accelerated filer" and "smaller reporting
company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☐
Accelerated filer
☐
Non-accelerated filer
☒
Smaller reporting company
☒
Emerging growth company
☒
If an emerging growth company,
indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.
☐
The Registrant hereby amends
this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further
amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a)
of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Commission acting
pursuant to said Section 8(a) may determine.
The information in
this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed
with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting
an offer to buy these securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED JANUARY 23, 2025
EON Resources Inc.
Up to 5,079,050 Shares of Class A Common Stock
This prospectus relates to
the offering from time to time by the selling securityholders named in this prospectus (the "Selling Securityholders") of
up to an aggregate of 5,079,050 shares of our Class A Common Stock, par value $0.0001 per share ("Class A Common Stock"),
consisting of (i) up to 5,000,000 shares of Class A Common Stock (the "ELOC Shares") that we may sell to White Lion Capital,
LLC ("White Lion"), from time to time at our sole discretion, pursuant to the common stock purchase agreement dated October
17, 2022 (as amended, the "Common Stock Purchase Agreement"), (ii) 69,050 shares of Class A Common Stock issued to certain
Selling Securityholders in exchange for forgiveness of accounts payable (the "Exchange Shares"), and (iii) 10,000 shares of
Class A Common Stock issued to a certain Selling Securityholder in exchange for targeting and research services (the "Service Shares").
The shares of Class A Common
Stock being registered for resale were issued to, purchased by or will be purchased by the Selling Securityholders for the following consideration:
(i) a purchase price yet to be determined for the ELOC Shares (as described herein), (ii) a purchase of price of $1.00 per share of Class
A Common Stock for the Exchange Shares, and (iii) a purchase of price of $0.82 per share of Class A Common Stock for the Service Shares.
On November 15, 2023, we completed
the purchase of equity interests and transactions contemplated thereby (the "Purchase") as set forth in that certain Amended
and Restated Membership Interest Purchase Agreement, dated August 28, 2023, as amended (the "MIPA"), by and among us, HNRA
Upstream, LLC, a newly formed Delaware limited liability company which is managed by us, and is a subsidiary of ours ("OpCo"),
and HNRA Partner, Inc., a newly formed Delaware corporation and wholly owned subsidiary of ours ("SPAC Subsidiary", and together
with us and OpCo, "Buyer" and each a "Buyer"), CIC Pogo LP, a Delaware limited partnership ("CIC"),
DenCo Resources, LLC, a Texas limited liability company ("DenCo"), Pogo Resources Management, LLC, a Texas limited liability
company ("Pogo Management"), 4400 Holdings, LLC, a Texas limited liability company ("4400" and, together with
CIC, DenCo and Pogo Management, collectively, "Seller" and each a "Seller"), and, solely with respect to Section 6.20
of the MIPA, HNRAC Sponsors, LLC (the "Sponsor").
We are registering the offer
and sale of the securities listed herein to satisfy certain registration rights we have granted. All of the securities being registered
for resale, when sold, will be sold by the Selling Securityholders.
We are not selling any Class
A Common Stock under this prospectus and will not receive any of the proceeds from the sale or other disposition of shares by the Selling
Securityholders except we may receive proceeds from the sale of the shares to White Lion under the Common Stock Purchase Agreement, from
time to time in our discretion after the date the registration statement that includes this prospectus is declared effective and after
satisfaction of other conditions in the Common Stock Purchase Agreement. The purchase price to be paid by White Lion for any such shares
will equal 96% of the lowest daily volume-weighted average price of Class A Common Stock during a period of two consecutive trading days
following the applicable Notice Date.
We filed a registration statement on Form S-1 (File No. 333-275378) that became effective on August 9, 2024, which registered for resale
up to 5,000,000 shares of Class A Common Stock that may be sold to White Lion from time to time (the "Prior Registration Statement").
We have sold approximately $4.9 million in shares of our Class A Common Stock pursuant to the Common Stock Purchase Agreement, and we
may receive proceeds of up to $145.1 million remaining under the facility from the sale of the shares of Class A Common Stock to White
Lion under the Common Stock Purchase Agreement. White Lion has resold 4,350,000 shares registered on the Prior Registration Statement,
with 650,000 shares remaining registered but unissued and not resold. It is the intention of the parties for White Lion to sell the remaining
shares from the Prior Registration Statement prior to reselling shares under the registration statement of which this prospectus is made
a part.
White Lion is an underwriter
within the meaning of Section 2(a)(11) of the Securities Act.
The Selling Securityholders may sell or otherwise dispose of the securities
covered by this prospectus in a number of different ways. We provide more information about how the Selling Securityholders may sell or
otherwise dispose of their securities in the section entitled "Plan of Distribution" on page 133. Discounts, concessions,
commissions and similar selling expenses attributable to the sale of securities covered by this prospectus will be borne by the Selling
Securityholders. We will pay the expenses incurred in registering the shares of Class A Common Stock covered by this prospectus, including
legal and accounting fees. We will not be paying any underwriting discounts or commissions in this offering to any person.
Our Class A Common Stock is listed on NYSE American under the symbol
"EONR" and our Public Warrants are listed on NYSE American under the symbol "EONR WS". On January 22, 2025, the
last reported sale price for our Class A Common Stock was $1.38.
As of January 15, 2025, there
were 12,895,544 shares of Class A Common Stock outstanding. If all shares being registered hereby were sold, it would comprise approximately
28.4% of our total shares of Class A Common Stock outstanding. Given the current market price of our Class A Common Stock, certain of
the Selling Securityholders who paid less for their shares than such current market price will receive a higher rate of return on any
such sales than the public securityholders who purchased Class A Common Stock in our initial public offering or any Selling Securityholder
who paid more for their shares than the current market price.
Investing in our Class A Common Stock involves risks. See "Risk
Factors" beginning on page 10.
We have not registered the
sale of the shares under the securities laws of any state. Brokers or dealers effecting transactions in the shares of Class A Common Stock
offered hereby should confirm that the shares have been registered under the securities laws of the state or states in which sales of
the shares occur as of the time of such sales, or that there is an available exemption from the registration requirements of the securities
laws of such states.
We have not authorized anyone,
including any salesperson or broker, to give oral or written information about this offering, EON Resources Inc., or the shares of Class
A Common Stock offered hereby that is different from the information included in this prospectus. You should not assume that the information
in this prospectus, or any supplement to this prospectus, is accurate at any date other than the date indicated on the cover page of this
prospectus or any supplement to it.
We are an "emerging
growth company," as defined under the federal securities laws, and, as such, may elect to comply with certain reduced public company
reporting requirements for future filings.
Neither the SEC nor any
state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete.
Any representation to the contrary is a criminal offense.
TABLE OF CONTENTS
Page
About this Prospectus
ii
Prospectus Summary
1
Summary Risk Factors
5
About this Offering
7
Summary Historical Financial Information of EON Resources Inc.
8
Risk Factors
10
Special Note Regarding Forward-Looking Statements
39
White Lion Committed Equity Financing
41
Use of Proceeds
44
Business of EON
56
Management's Discussion and Analysis of Financial Condition and Results of Operations of EON
83
Management
98
Compensation of Executive Officers and Directors
103
Beneficial Ownership of Securities
114
Market Prices and Dividends
116
Certain Relationships and Related Transactions
117
Selling Securityholders
119
Description of Securities
121
Material United States Federal Income Tax Considerations
128
Securities Act Restrictions on Resale of Our Securities
132
Plan of Distribution
133
Legal Matters
136
Experts
136
Where You Can Find More Information
136
Index to Financial Statements
F-1
i
ABOUT THIS PROSPECTUS
This prospectus is part of
a registration statement on Form S-1 that we filed with the U.S. Securities Exchange Commission (the "SEC"), under which the
Selling Securityholders may, from time to time, sell the securities listed herein offered by them described in this prospectus. We will
not receive any proceeds from the sale by such Selling Securityholders of the securities offered by them described in this prospectus.
However, we may receive proceeds of up to approximately $145.1 million in remaining available proceeds from the sale of the shares to
White Lion under the Common Stock Purchase Agreement, from time to time in our discretion after the date the registration statement that
includes this prospectus is declared effective and after satisfaction of other conditions in the Common Stock Purchase Agreement.
Neither we nor the Selling
Securityholders have authorized anyone to provide you with any information or to make any representations other than those contained in
this prospectus, any applicable prospectus supplement, or any free writing prospectuses prepared by or on behalf of us or to which we
have referred you. Neither we nor the Selling Securityholders take responsibility for, and can provide no assurance as to the reliability
of, any other information that others may give you. Neither we nor the Selling Securityholders will make an offer to sell these securities
in any jurisdiction where such offer or sale is not permitted. No dealer, salesperson, or other person is authorized to give any information
or to represent anything not contained in this prospectus, any applicable prospectus supplement or any related free writing prospectus.
You should assume that the information appearing in this prospectus or any prospectus supplement is accurate as of the date on the front
of those documents only, regardless of the time of delivery of this prospectus or any applicable prospectus supplement, or any sale of
a security. Our business, financial condition, results of operations, and prospects may have changed since those dates.
The Selling Securityholders
and their permitted transferees may use this registration statement to sell securities from time to time through any means described in
the section entitled "Plan of Distribution
.
" More specific terms of any securities that the Selling Securityholders
and their permitted transferees offer and sell may be provided in a prospectus supplement that describes, among other things, the specific
amounts and prices of the securities being offered and the terms of the offering.
We may also provide a prospectus
supplement or post-effective amendment to the registration statement to add information to, or update or change information contained
in, this prospectus. Any statement contained in this prospectus will be deemed to be modified or superseded for purposes of this prospectus
to the extent that a statement contained in such prospectus supplement or post-effective amendment modifies or supersedes such statement.
Any statement so modified will be deemed to constitute a part of this prospectus only as so modified, and any statement so superseded
will be deemed not to constitute a part of this prospectus. You should read both this prospectus and any applicable prospectus supplement
or post-effective amendment to the registration statement together with the additional information to which we refer you in the section
of this prospectus entitled "Where You Can Find More Information."
This prospectus contains summaries
of certain provisions contained in some of the documents described herein, but reference is made to the actual documents for complete
information. All of the summaries are qualified in their entirety by the actual documents. Copies of some of the documents referred to
herein have been filed, will be filed, or will be incorporated by reference as exhibits to the registration statement of which this prospectus
is a part, and you may obtain copies of those documents as described below under "Where You Can Find More Information."
ii
CERTAIN TERMS
Unless otherwise stated in this prospectus,
or the context otherwise requires, references to:
●
"Class A Common Stock" is to our Class A Common Stock, par value $0.0001 per share;
●
"Class B Common Stock" is to our Class B Common Stock, par value $0.0001 per share;
●
"founder shares" are to shares of our Class A Common Stock initially purchased by our sponsor in a private placement prior to our Initial Public Offering;
●
"initial business combination" or "Purchase" refers to the completion of our initial business combination on November 15, 2023, pursuant to the closing of the transactions contemplated by the MIPA whereby we acquired (through our subsidiaries) 100% of the outstanding membership interests of Pogo Resources, LLC, a Texas limited liability company ("Pogo" or the "Target");
●
"Initial Public Offering" refers to the Initial Public Offering closed on February 15, 2022;
●
"initial stockholders" are to our holders of our founder shares prior to our Initial Public Offering (or their permitted transferees);
●
"management" or our "management team" are to our officers and directors;
●
"MIPA" means that that certain Amended and Restated Membership Interest Purchase Agreement, dated August 28, 2023, as amended (the "MIPA"), by and among us, HNRA Upstream, LLC, a newly formed Delaware limited liability company which is managed by us, and is a subsidiary of ours ("OpCo"), and HNRA Partner, Inc., a newly formed Delaware corporation and wholly owned subsidiary of ours ("SPAC Subsidiary", and together with us and OpCo, "Buyer" and each a "Buyer"), CIC Pogo LP, a Delaware limited partnership ("CIC"), DenCo Resources, LLC, a Texas limited liability company ("DenCo"), Pogo Resources Management, LLC, a Texas limited liability company ("Pogo Management"), 4400 Holdings, LLC, a Texas limited liability company ("4400" and, together with CIC, DenCo and Pogo Management, collectively, "Seller" and each a "Seller"), and, solely with respect to Section 6.20 of the MIPA, Sponsor.
●
"Predecessor" refers to the historical business of Pogo prior to the Purchase on November 15, 2023.
●
"private placement units" are to the units issued to our sponsor in a private placement simultaneously with the closing of our Initial Public Offering;
●
"private placement warrants" are to the warrants sold as part of the private placement units, and to any private placement warrants or warrants issued in connection with working capital loans that were sold to third parties, our executive officers, or our directors (or permitted transferees).
●
"public shares" are to shares of our Class A Common Stock sold as part of the units in our Initial Public Offering (whether they were purchased in our Initial Public Offering or thereafter in the open market);
●
"public stockholders" are to the holders of our public shares, including our initial stockholders and management team to the extent our initial stockholders and/or members of our management team purchase public shares, provided that each initial stockholder's and member of our management team's status as a "public stockholder" shall only exist with respect to such public shares;
●
"public warrants" are to our redeemable warrants sold as part of the units in our Initial Public Offering (whether they were purchased in our Initial Public Offering or thereafter in the open market);
●
"Sponsor" refers to HNRAC Sponsors, LLC, a Delaware limited liability company;
●
"warrants" are to our redeemable warrants, which includes the public warrants as well as the private placement warrants to the extent they are no longer held by the initial purchasers of the private placement units or their permitted transferees;
●
"EON," "EONR," "registrant," "we," "us," "company" or "our company" "Successor" are to EON Resources, Inc. (and the business of Pogo which became the business of the Company after giving effect to the Purchase).
iii
PROSPECTUS SUMMARY
This summary highlights
information contained elsewhere in this prospectus and may not contain all of the information that you should consider before investing
in the shares. You are urged to read this prospectus in its entirety, including the information under "Risk Factors" and our
financial statements and related notes included elsewhere in this Prospectus. Unless otherwise indicated, the estimates of our proved,
probable and possible reserves as of December 31, 2022 and 2023 were prepared by the third-party independent petroleum engineering firm
of William M. Cobb & Associates, Inc.
Overview
EON Resources, Inc. (f/k/a
HNR Acquisition Corp), was incorporated in Delaware as a blank check company formed for the purpose of effecting a merger, capital stock
exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses or entities. Prior
to closing the Purchase, our efforts were limited to organizational activities, completion of an initial public offering and the evaluation
of possible business combinations. On February 15, 2022, we consummated the Initial Public Offering of 7,500,000 units (the "Units"),
at $10.00 per Unit, generating proceeds of $75,000,000. Additionally, the underwriter fully exercised its option to purchase 1,125,000
additional Units, for which we received cash proceeds of $11,250,000. Simultaneously with the closing of the Initial Public Offering,
we consummated the sale of 505,000 private placement units at a price of $10.00 per unit generating proceeds of $5,050,000 in a private
placement to our Sponsor and EF Hutton (formerly Kingswood Capital Markets) ("EF Hutton"). On April 4, 2022, the Units separated
into Class A Common Stock and warrants, and ceased trading. On April 4, 2022, the Class A Common Stock and Public Warrants commenced trading
on the NYSE American.
We identified Pogo as the
initial target for our initial business combination, and on November 15, 2023, we closed on the acquisition of Pogo. While we were permitted
to pursue an acquisition opportunity in any industry or sector, we focused on assets used in exploring, developing, producing, transporting,
storing, gathering, processing, fractionating, refining, distributing or marketing of natural gas, natural gas liquids, crude oil or refined
products in North America.
On September 16, 2024, we
filed a Certificate of Amendment to our Amended and Restated Certificate of Incorporation with the Secretary of State of the State of
Delaware to change our name from "HNR Acquisition Corp" to "EON Resources Inc.", effective at 11:59PM on September
17, 2024. Following the change of our name from HNR Acquisition Corp to EON Resources Inc., effective at the beginning of trading on September
18, 2024, our Class A Common Stock began trading on the NYSE American under the symbol "EONR" and our Public Warrants began
trading on the NYSE American under the symbol "EONR WS". The CUSIP numbers for the Company's Class A Common Stock and
Public Warrants did not change.
Purchase
On December 27, 2022,
we entered into a Membership Interest Purchase Agreement (the "Original MIPA") with CIC Pogo LP, a Delaware limited partnership
("CIC"), DenCo Resources, LLC, a Texas limited liability company ("DenCo"), Pogo Resources Management, LLC, a
Texas limited liability company ("Pogo Management"), 4400 Holdings, LLC, a Texas limited liability company ("4400"
and, together with CIC, DenCo and Pogo Management, collectively, "Seller" and each a "Seller"), and, solely with
respect to Section 7.20 of the Original MIPA, HNRAC Sponsors LLC, a Delaware limited liability company ("Sponsor"). On
August 28, 2023, we, HNRA Upstream, LLC, a newly formed Delaware limited liability company which is managed by us, and is a subsidiary
of ours ("OpCo"), and HNRA Partner, Inc., a newly formed Delaware corporation and wholly owned subsidiary of ours ("SPAC
Subsidiary", and together with us and OpCo, "Buyer" and each a "Buyer"), entered into an Amended and Restated
Membership Interest Purchase Agreement (the "A&R MIPA") with Seller, and, solely with respect to Section 6.20 of
the A&R MIPA, the Sponsor, which amended and restated the Original MIPA in its entirety (as amended and restated, the "MIPA").
Our stockholders approved the transactions contemplated by the MIPA at a special meeting of stockholders that was originally convened
October 30, 2023, adjourned, and then reconvened on November 13, 2023 (the "Special Meeting").
On November 15, 2023 (the
"Closing Date"), as contemplated by the MIPA:
●
We filed a Second Amended and Restated Certificate of Incorporation (the "Second A&R Charter") with the Secretary of State of the State of Delaware, pursuant to which the number of authorized shares of our capital stock, par value $0.0001 per share, was increased to 121,000,000 shares, consisting of (i) 100,000,000 shares of Class A Common Stock, (ii) 20,000,000 shares of Class B Common Stock, and (iii) 1,000,000 shares of preferred stock, par value $0.0001 per share;
1
●
Our shares of common stock were reclassified as Class A Common Stock; the Class B Common Stock has no economic rights but entitles its holder to one vote on all matters to be voted on by stockholders generally; holders of shares of Class A Common Stock and shares of Class B Common Stock will vote together as a single class on all matters presented to our stockholders for their vote or approval, except as otherwise required by applicable law or by the Second A&R Charter;
●
(A) We contributed to OpCo (i) all of our assets (excluding our interests in OpCo and the aggregate amount of cash required to satisfy any exercise by our stockholders of their Redemption Rights (as defined below)) and (ii) 2,000,000 newly issued shares of Class B Common Stock (such shares, the "Seller Class B Shares") and (B) in exchange therefor, OpCo issued to us a number of Class A common units of OpCo (the "OpCo Class A Units") equal to the number of total shares of Class A Common Stock issued and outstanding immediately after the closing (the "Closing") of the transactions contemplated by the MIPA (following the exercise by our stockholders of their Redemption Rights) (such transactions, the "SPAC Contribution"); and
●
Immediately following the SPAC Contribution, OpCo contributed $900,000 to SPAC Subsidiary in exchange for 100% of the outstanding common stock of SPAC Subsidiary (the "SPAC Subsidiary Contribution");
●
Immediately following the SPAC Subsidiary Contribution, Seller sold, contributed, assigned, and conveyed to (A) OpCo, and OpCo acquired and accepted from Seller, ninety-nine percent (99.0%) of the outstanding membership interests of Pogo Resources, LLC, a Texas limited liability company ("Pogo" or the "Target"), and (B) SPAC Subsidiary, and SPAC Subsidiary purchased and accepted from Seller, one percent (1.0%) of the outstanding membership interest of Target (together with the ninety-nine percent (99.0%) interest, the "Target Interests"), in each case, in exchange for (x) $900,000 of the Cash Consideration (as defined below) in the case of SPAC Subsidiary and (y) the remainder of the Aggregate Consideration (as defined below) in the case of OpCo (such transactions, together with the SPAC Contribution and SPAC Subsidiary Contribution and the other transactions contemplated by the MIPA, the "Purchase").
The "Aggregate Consideration"
for the Target Interests was: (a) cash in the amount of $31,074,127 in immediately available funds (the "Cash Consideration"),
(b) 2,000,000 Class B common units of OpCo ("OpCo Class B Units") valued at $10.00 per unit (the "Common Unit Consideration"),
which will be equal to and exchangeable into 2,000,000 shares of Class A Common Stock issuable upon exercise of the OpCo Exchange Right
(as defined below), as reflected in the amended and restated limited liability company agreement of OpCo that became effective at Closing
(the "A&R OpCo LLC Agreement"), (c) the Seller Class B Shares, (d) $15,000,000 payable through a promissory note to Seller
(the "Seller Promissory Note"), (e) 1,500,000 preferred units (the "OpCo Preferred Units" and together with the
Opco Class A Units and the OpCo Class B Units, the "OpCo Units") of OpCo (the "Preferred Unit Consideration",
and, together with the Common Unit Consideration, the "Unit Consideration"), and (f) an agreement for Buyer, on or before
November 21, 2023, to settle and pay to Seller $1,925,873 from sales proceeds received from oil and gas production attributable to Pogo,
including pursuant to its third party contract with affiliates of Chevron. At Closing, 500,000 Seller Class B Shares (the "Escrowed
Share Consideration") were placed in escrow for the benefit of Buyer pursuant to an escrow agreement and the indemnity provisions
in the MIPA. The Aggregate Consideration is subject to adjustment in accordance with the MIPA.
2
In connection with the Purchase,
holders of 3,323,707 shares of common stock sold in our initial public offering (the "public shares") properly exercised their
right to have their public shares redeemed (the "Redemption Rights") for a pro rata portion of the trust account (the "Trust
Account") which held the proceeds from our initial public offering, funds from our payments to extend the time to consummate a business
combination and interest earned, calculated as of two business days prior to the Closing, which was approximately $10.95 per share, or
$49,362,479 in the aggregate. The remaining balance in the Trust Account (after giving effect to the Redemption Rights) was $12,979,300.
Immediately upon the Closing,
Pogo Royalty exercised the OpCo Exchange Right as it relates to 200,000 OpCo Class B units (and 200,000 shares of Class B Common Stock).
After giving effect to the Purchase, the redemption of public shares as described above and the exchange mentioned in the preceding sentence,
were (i) 5,097,009 shares of Class A Common Stock issued and outstanding, (ii) 1,800,000 shares of Class B Common Stock issued and outstanding
and (iii) no shares of preferred stock issued and outstanding.
Pogo Overview
Pogo is an exploration and
production company that began operations in February 2017. Pogo is based in Dallas, Texas, and a field office in Loco Hills, New
Mexico. As of December 31, 2023, Pogo's operating focus is the Northwest Shelf of the Permian Basin, with a specific emphasis
on oil and gas producing properties located in the Grayburg-Jackson Field in Eddy County, New Mexico. Pogo is the Operator of Record
of its oil and gas properties, operating its properties through its wholly owned subsidiary, LH Operating LLC. Pogo completed multiple
acquisitions in 2018 and 2019. These acquisitions included multiple producing properties in Lea and Eddy counties, New Mexico. In
2020, after identifying its core development property, Pogo successfully completed a series of divestures of its non-core properties.
Then, with one key asset, its Grayburg-Jackson Field in Eddy County, New Mexico, Pogo focused all of its efforts on developing this
asset. This has been Pogo's focus for 2022 and 2023. Currently, Pogo and EON combined have 14 employees (5 executive officers where
4 are in Houston and 1 in Lubbock; 9 field staff in Loco Hills). From time to time, on an as needed basis, contract workers handle additional
necessary responsibilities.
Pogo owns, manages, and operates,
through its wholly owned subsidiary, LH Operating, LLC, 100% working interest in a gross 13,700 acres located on the Northwest Shelf of
the prolific oil and gas producing Permian Basin. Pogo benefits from cash flow growth through continued development of its working interest's
ownership, with relatively low capital cost and lease operating expenses. As of December 31, 2023, average net daily production associated
with Pogo's working interests was 1,022 barrel of oil equivalent ("BOE") per day consisting of 94% oil and 6% natural
gas. Pogo expects to continue to grow its cash flow by production enhancements in its operations on its gross 13,700-acre leasehold.
Furthermore, Pogo intends to make additional acquisitions within the Permian Basin, as well as other oil and gas producing regions in
the USA, that meet its investment criteria for minimum risk, geologic quality, operator capability, remaining growth potential, cash flow
generation and, most importantly, rate of return.
As of December 31, 2023,
100% of Pogo's gross 13,700 leasehold acres were located in Eddy County, New Mexico, where there 100% of the leasehold working interests
owned by Pogo consist of state and federal lands. Pogo believes the Permian Basin offers some of the most compelling rates of return for
Pogo and significant potential for cash flow growth. As a result of compelling rates of return, development activity in the Permian Basin
has outpaced all other onshore U.S. oil and gas basins since the end of 2016. This development activity has driven basin-level production
to grow faster than production in the rest of the United States.
Pogo's working interests
entitle it to receive an average of 97% of the net revenue from crude oil and natural gas produced from the oil and gas reservoirs underlying
its acreage. Pogo is not under any mandatory obligation to fund drilling and completion costs associated with oil and gas development
because 100% of its lease holdings are held by production. As a working interest owner with significant net earnings, Pogo seeks to fully
capture all remaining oil and gas reserves underlying its leasehold acres by systematically developing its low risk, predictable, proven
reserves by means of adding perforations in previously drilled and completed wells, were applicable, and drilling new wells in a predetermined
drilling pattern. Accordingly, Pogo's development model generates strong margins greater than 60%, at low risk, predictable, production
outcomes that requires low overhead and is highly scalable. For the year ended December 31, 2023, Pogo's lifting cost was about
$27.21 per barrel of oil equivalent at a realized price of $72.69 per BOE, excluding the impact of settled commodity derivatives. Pogo
is led by a management team with extensive oil and gas engineering, geologic and land expertise, long-standing industry relationships
and a history of successfully managing a portfolio of working and leasehold interests, producing crude oil and natural gas assets. Pogo
intends to capitalize on its management team's expertise and relationships to increase production and cash flow in the field.
3
Pogo Business Strategies
Pogo's primary business
objective is to generate discretionary cash flow by maintaining its strong cash flow from the PDP reserves and increasing cash flow by
developing predictable, low cost PDNP reserves in its Permian Basin asset. Pogo intends to accomplish this objective by executing the
following strategies:
Generate strong cash
flow supported by means of disciplined development of its PDNP Reserves.
As the sole working interest owner, Pogo benefits from
the continued organic development of its acreage in the Permian Basin. As of December 31, 2023, Pogo, in conjunction with William
M. Cobb & Associates, Inc. ("Cobb & Associates"), a third-party engineering consulting firm, has confirmed that
Pogo has 115, low cost, well patterns to be developed during 2024 to 2027. The total costs to complete these 115 well patterns have been
predetermined by historical analysis. The estimated cost to complete each PDNP pattern is $345,652 and the estimated cost to complete
each PUD pattern is $1,187,698. A single well pattern consists of one each producing well with its corresponding or dedicated water injection
wells, with each injection well situated on four sides of the producing well. Water injection wells are necessary to maintain reservoir
pressure in its original state and to move the oil in place toward the producing well. Pressure maintenance helps ensure maximum oil and
gas recovery. Without pressure maintenance, oil recoveries from a producing oil reservoir generally do not exceed 10% of the original
oil in place ("OOIP"). With pressure maintenance by re-injecting produced water into the oil reservoir, then Pogo expects
to see ultimate oil recoveries 25% or greater of the OOIP. Offsetting oil wells on its leasehold also take advantage of the water
injected into the oil reservoir, and is able to convert a high percentage of its revenue to discretionary cash flow. Because Pogo owns
100% working interests it incurs 100% of the monthly leasehold operating costs for the production of crude oil and natural gas or capital
costs for the drilling and completion of wells on its acreage. Because these wells are shallow oil producers, with vertical depths between
1500 ft and 4000 ft, the monthly operating expenses are relatively low.
Focus primarily on the
Permian Basin.
All of Pogo's working interests are currently located in the Permian Basin, one of the most prolific oil
and gas basins in the United States. Pogo believes the Permian Basin provides an attractive combination of highly-economic and
oil-weighted geologic and reservoir properties, opportunities for development with significant inventory of drilling locations and
zones to be delineated our top-tier management team.
●
Business Relations.
Leverage expertise and relationships to continue acquiring Permian Basin targets with high working interests in actively producing oil fields from top-tier E&P operators, with predictable, stable cash flow, and with significant growth potential. Pogo has a history of evaluating, pursuing and consummating acquisitions of crude oil and natural gas targets in the Permian Basin and other oil producing basins. Pogo's management team intends to continue to apply this experience in a disciplined manner when identifying and acquiring working interests. Pogo believes that the current market environment is favorable for oil and gas acquisitions in the Permian Basin and other oil generating basins. Numerous asset packages from sellers presents attractive opportunities for assets that meet Pogo's target investment criteria. With sellers seeking to monetize their investments, Pogo intends to continue to acquire working interests that have substantial resource potential in the Permian Basin. Pogo expects to focus on acquisitions that complement its current footprint in the Permian Basin while targeting working interests underlying large scale, contiguous acreage positions that have a history of predictable, stable oil and gas production rates, and with attractive growth potential. Furthermore, Pogo seeks to maximize its return on capital by targeting acquisitions that meet the following criteria:
●
sufficient visibility to production growth;
●
attractive economics;
●
de-risked geology supported by stable production;
●
targets from top-tier E&P operators; and
●
a geographic footprint that Pogo believes is complementary to its current Permian Basin asset and maximizes its potential for upside reserve and production growth.
Maintain conservative and
flexible capital structure to support Pogo's business and facilitate long-term operations.
Pogo is committed to maintaining
a conservative capital structure that will afford it the financial flexibility to execute its business strategies on an ongoing basis.
Pogo believes that internally generated cash flows from its working interests and operations, available borrowing capacity under its revolving
credit facility, and access to capital markets will provide it with sufficient liquidity and financial flexibility to continue to acquire
attractive targets with high working interests that will position it to grow its cash flows in order to distributed to its shareholders
as dividends and/or reinvested to further expand its base of cash flow generating assets. Pogo intends to maintain a conservative leverage
profile and utilize a mix of cash flows from operations and issuance of debt and equity securities to finance future acquisitions.
4
SUMMARY RISK FACTORS
You should carefully read
this prospectus, including the section entitled "Risk Factors." Certain of the key risks are summarized below.
●
Pogo's producing properties are located in the Permian Basin, making it vulnerable to risks associated with operating in a single geographic area.
●
Title to the properties in which Pogo is acquiring an interest may be impaired by title defects.
●
Pogo depends on various services for the development and production activities on the properties it operates. Substantially all Pogo's revenue is derived from these producing properties. A reduction in the expected number of wells to be developed on Pogo's acreage by or the failure of Pogo to develop and operate the wells on its acreage could have an adverse effect on its results of operations and cash flows adequately and efficiently.
●
Pogo's identified development activities are susceptible to uncertainties that could materially alter the occurrence or timing of their development activities.
●
Acquisitions and Pogo's development of Pogo's leases will require substantial capital, and our company may be unable to obtain needed capital or financing on satisfactory terms or at all.
●
Pogo currently plans to enter hedging arrangements with respect to the production of crude oil, and possibly natural gas which is a smaller portion of the reserves. Pogo will mitigate the exposure to the impact of decreases in the prices by establishing a hedging plan and structure that protects the earnings to a reasonable level, and the debt service requirements.
●
Pogo's estimated reserves are based on many assumptions that may turn out to be inaccurate. Any material inaccuracies in these reserve estimates or underlying assumptions will materially affect the quantities and present value of its reserves.
●
We believe Pogo currently has ineffective internal control over its financial reporting.
●
A substantial majority of Pogo's revenues from crude oil and gas producing activities are derived from its operating properties that are based on the price at which crude oil and natural gas produced from the acreage underlying its interests are sold. Prices of crude oil and natural gas are volatile due to factors beyond Pogo's control. A substantial or extended decline in commodity prices may adversely affect Pogo's business, financial condition, results of operations and cash flows.
●
If commodity prices decrease to a level such that Pogo's future undiscounted cash flows from its properties are less than their carrying value, Pogo may be required to take write-downs of the carrying values of its properties.
5
●
The unavailability, high cost or shortages of rigs, equipment, raw materials, supplies or personnel may restrict or result in increased costs to develop and operate Pogo's properties.
●
The marketability of crude oil and natural gas production is dependent upon transportation and processing and refining facilities, which Pogo cannot control. Any limitation in the availability of those facilities could interfere with Pogo's ability to market its production and could harm Pogo's business.
●
Drilling for and producing crude oil and natural gas are high-risk activities with many uncertainties that may materially adversely affect Pogo's business, financial condition, results of operations and cash flows.
●
Crude oil and natural gas operations are subject to various governmental laws and regulations. Compliance with these laws and regulations can be burdensome and expensive for Pogo, and failure to comply could result in Pogo incurring significant liabilities, either of which may impact its willingness to develop Pogo's interests.
●
Federal and state legislative and regulatory initiatives relating to hydraulic fracturing could cause Pogo to incur increased costs, additional operating restrictions or delays and have fewer potential development locations.
●
The historical financial results of EON included in this prospectus may not be indicative of what EON's actual financial position or results of operations would have been if it were a public company.
●
Purchases made pursuant to the Common Stock Purchase Agreement will be made at a discount to the volume weighted average price of Class A Common Stock, which may result in negative pressure on the stock price.
●
It is not possible to predict the actual number of shares of Class A Common Stock, if any, we will sell under the Common Stock Purchase Agreement to White Lion or the actual gross proceeds resulting from those sales.
●
The sale and issuance of Class A Common Stock to White Lion will cause dilution to our existing securityholders, and the resale of the Class A Common Stock acquired by White Lion, or the perception that such resales may occur, could cause the price of our Class A Common Stock to decrease.
6
ABOUT THIS OFFERING
This prospectus relates to
the offering of up to 5,079,050 shares of Class A Common Stock.
Resale Offering of Class A Common Stock
Shares of Class A Common Stock Offered by the Selling Securityholders
An aggregate of 5,079,050 shares of our Class A Common Stock, consisting of (i) up to 5,000,000 shares of Class A Common Stock (the "ELOC Shares") that we may sell to White Lion Capital, LLC ("White Lion"), from time to time at our sole discretion, pursuant to the common stock purchase agreement dated October 17, 2022 (as amended, the "Common Stock Purchase Agreement"), (ii) 69,050 shares of Class A Common Stock issued to certain Selling Securityholders in exchange for forgiveness of accounts payable (the "Exchange Shares"), and (iii) 10,000 shares of Class A Common Stock issued to a certain Selling Securityholder in exchange for targeting and research services (the "Service Shares").
Terms of the Offering
The Selling Securityholders will determine when and how they will dispose of the shares of Class A Common Stock registered under this prospectus for resale.
Shares of Common Stock Outstanding
12,895,544 shares of Class A Common Stock issued and outstanding and 500,000 shares of Class B Common Stock issued and outstanding, each as of January 15, 2025.
Purchase Price of Securities offered for Resale
The shares of Class A Common Stock being registered for resale were issued to, purchased by or will be purchased by the Selling Securityholders for the following consideration: (i) a purchase price yet to be determined for the ELOC Shares (as described herein), (ii) a purchase of price of $1.00 per share of Class A Common Stock for the Exchange Shares, and (iii) a purchase of price of $0.82 per share of Class A Common Stock for the Service Shares.
Use of Proceeds
We will not receive any of the proceeds from the resale of the shares offered by the Selling Securityholders. However, we may receive up to approximately $145.1 million in remaining available proceeds from the sale of the shares to White Lion under the Common Stock Purchase Agreement, from time to time in our discretion after the date the registration statement that includes this prospectus is declared effective and after satisfaction of other conditions in the Common Stock Purchase Agreement. We intend to use any proceeds from White Lion that we receive under the Common Stock Purchase Agreement for working capital, strategic and general corporate purposes.
Market for Class A Common Stock
Our Class A Common Stock is currently listed on NYSE American under
the symbol "EONR" and our Public Warrants are currently listed on NYSE American under the symbol "EONR WS". On
January 22, 2025, the last quoted sale price for our Class A Common Stock as reported on NYSE American was $1.38 per share.
Risk Factors
See the section titled "Risk Factors" beginning on page
10 of this prospectus and other information included in this prospectus for a discussion of factors that you should consider carefully
before deciding to invest in our Class A Common Stock.
7
SUMMARY HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
OF EON RESOURCES INC.
The following table presents
selected historical consolidated financial data for the periods indicated. The summary historical consolidated financial data as of June
30, 2024 and for the six months ended June 30, 2024 (Successor) are derived from the Company's unaudited consolidated financial
statements and related notes thereto. The summary historical consolidated financial data as of December 31, 2023 and for the period from
November 15, 2023 to December 31, 2023 (Successor) are derived from the Company's audited consolidated financial statements and
related notes thereto. The summary historical consolidated financial data as of and for the three months ended March 31, 2024 are derived
from Pogo's unaudited consolidated financial statements and related notes thereto. The summary historical consolidated financial
data as of and for the years ended December 31, 2022, 2021 and 2020 and for the period from January 1, 2023 to November 14,
2023 for the Predecessor are derived from Pogo's audited consolidated financial statements and related notes thereto. The unaudited
and audited consolidated financial statements and related notes thereto for the are included elsewhere in this prospectus.
The Company's historical
results are not necessarily indicative of the results that may be expected for any other period in the future. For a detailed discussion
of the summary historical financial data contained in the following table, please read "Management's Discussion and Analysis
of Financial Condition and Results of Operations of Pogo." The following table should also be read in conjunction with the historical
financial statements of Pogo included elsewhere in this prospectus. Among other things, the historical financial statements include more
detailed information regarding the basis of presentation for the information in the following table.
Successor
Predecessor
Nine
Months Ended
September 30,
November 15,
2023 to
December 31,
January 1,
2023 to
November 14,
Year Ended December 31,
2024
2023
2023
2022
2021
2020
Statement of Operations Data:
Revenues
Oil and gas revenues
$
15,529,033
$
2,584,115
$
23,666,074
$
39,941,778
$
23,966,375
$
8,202,200
Commodity derivative gain (loss)
(180,063
)
340,808
51,957
(4,793,790
)
(5,704,113
)
1,239,436
Other revenue
359,270
50,738
520,451
255,952
—
—
Net revenues
15,708,240
2,975,661
24,238,482
35,403,940
18,262,262
9,441,636
Expenses
Production taxes, transportation and processing
1,326,789
226,062
2,117,800
3,484,477
2,082,371
825,525
Lease operating
6,530,431
1,453,367
8,692,752
8,418,739
5,310,139
4,148,592
Depreciation, depletion and amortization
1,506,242
352,127
1,497,749
1,613,402
4,783,832
2,207,963
Accretion of asset retirement obligations
83,926
11,062
848,040
1,575,296
368,741
117,562
General and administrative
6,868,749
3,553,117
3,700,267
2,953,202
1,862,969
1,468,615
Acquisition costs
—
9,999,860
—
—
—
—
Total operating expenses
16,316,137
15,595,595
16,856,608
18,045,116
14,408,052
8,768,257
Operating income (loss)
(607,897
)
(12,619,934
)
7,381,874
17,358,824
3,854,210
673,379
Other income (expenses)
Change in fair value of warrant liability
(484,799
)
187,704
—
—
—
—
Change in fair value of forward purchase agreement liability
(4,534,766
)
3,268,581
—
—
—
—
Amortization of debt discount
(1,982,958
)
(1,191,553
)
—
—
—
—
Interest expense
(5,732,747
)
(1,043,312
)
(1,834,208
)
(1,076,060
)
(498,916
)
(176,853
)
Interest income
44,214
6,736
313,401
—
—
—
Gain on extinguishment of liabilities
1,720,000
—
—
—
—
—
Insurance policy recovery
—
—
—
2,000,000
—
—
Net gain (loss) on asset sales
—
—
(816,011
)
—
69,486
(2,706,642
)
Other income (expense)
1,506
2,937
(74,193
)
13,238
(22,294
)
(94,643
)
Total other income (expenses)
(10,969,550
)
1,231,093
2,411,011
937,178
(451,724
)
(2,978,138
)
Income (loss) before income taxes
(11,577,447
)
(11,388,841
)
4,970,863
18,296,002
3,402,486
(2,304,759
)
Income tax provision
2,404,979
2,387,639
—
—
—
—
Net income (loss)
(9,172,468
)
(9,001,202
)
4,970,863
18,296,002
3,402,486
(2,304,759
)
Net income (loss) attributable to noncontrolling interests
—
—
—
—
—
—
Net income (loss) attributable to EON Resources Inc.
$
(9,172,468
)
$
(9,001,202
)
$
4,970,863
$
18,296,002
$
3,402,486
$
(2,304,759
)
8
Successor
Predecessor
Nine
Months Ended
September 30,
November 15,
2023 to
December 31,
January 1,
2023 to
November 14,
Year Ended December 31,
2024
2023
2022
2022
2021
2020
Statement of Cash Flows Data:
Operating activities
$
3,346,362
$
484,474
$
8,190,563
$
18,651,132
$
9,719,795
$
3,186,518
Investing activities
(3,295,667
)
18,296,176
(6,960,555
)
(20,700,859
)
(24,260,882
)
(8,104,490
)
Financing activities
(809,253
)
(17,866,128
)
(3,000,000
)
3,000,000
15,500,000
4,029,508
Net cash provided (used)
$
(758,558
)
$
914,522
$
(1,769,992
)
$
950,273
$
958,913
$
(888,464
)
Successor
Predecessor
As of
June 30,
As of
December 31,
As of December 31,
2024
2023
2022
2021
2020
Selected Balance Sheet Data:
Current assets
$
5,980,782
$
6,812,448
$
5,476,133
$
4,149,111
$
1,634,108
Crude oil and natural gas properties, successful  efforts method
97,012,220
93,837,245
55,206,917
41,847,223
21,023,568
Other assets
20,000
76,199
4,025,353
193,099
131,596
Current liabilities
44,782,226
20,113,049
4,225,474
8,601,758
4,228,246
Long-term liabilities
34,261,462
50,006,614
31,978,682
25,385,824
9,822,692
Total stockholders' (deficit) equity attributable to EON Resources Inc. (Successor) or Pogo (Predecessor)
(6,425,818
)
(2,800,185
)
28,504,247
12,201,851
8,738,334
Noncontrolling interest
30,560,814
33,406,414
—
—
—
9
RISK FACTORS
An investment in our in
our Class A Common Stock involves a high degree of risk. The risks described below include all material risks to our company or to investors
in this offering that are known to our company. You should carefully consider such risks before participating in this offering. If any
of the following risks actually occur, our business, financial condition and results of operations could be materially harmed. As a result,
the trading price of our Class A Common Stock could decline, and you might lose all or part of your investment. When determining whether
to buy our Class A Common Stock, you should also refer to the other information in this prospectus, including our financial statements
and the related notes included elsewhere in this prospectus.
In addition to the other information
in this prospectus, you should carefully consider the following factors in evaluating us and our business. This prospectus contains, in
addition to historical information, forward-looking statements that involve risks and uncertainties, some of which are beyond our control.
Should one or more of these risks and uncertainties materialize or should underlying assumptions prove incorrect, our actual results could
differ materially. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below,
as well as those discussed elsewhere in this prospectus, including the documents incorporated by reference.
There are risks associated
with investing in companies such as ours who are primarily engaged in research and development. In addition to risks which could apply
to any company or business, you should also consider the business we are in and the following:
Risks Related to Our Business
Pogo's producing properties are located
in the Permian Basin, making it vulnerable to risks associated with operating in a single geographic area.
All of Pogo's producing
properties are currently geographically concentrated in the Permian Basin. As a result of this concentration, Pogo may be disproportionately
exposed to the impact of regional supply and demand factors, delays or interruptions of production from wells in this area caused by governmental
regulation, processing or transportation capacity constraints, availability of equipment, facilities, personnel or services market limitations,
natural disasters, adverse weather conditions, plant closures for scheduled maintenance or interruption of the processing or transportation
of crude oil and natural gas. In addition, the effect of fluctuations on supply and demand may become more pronounced within specific
geographic crude oil and natural gas producing areas such as the Permian Basin, which may cause these conditions to occur with greater
frequency or magnify the effects of these conditions. Due to the concentrated nature of Pogo's portfolio of properties, a number
of its properties could experience any of the same conditions at the same time, resulting in a relatively greater impact on its results
of operations than they might have on other companies that have a more diversified portfolio of properties. Such delays or interruptions
could have a material adverse effect on Pogo's financial condition and results of operations.
As a result of Pogo's
exclusive focus on the Permian Basin, it may be less competitive than other companies in bidding to acquire assets that include properties
both within and outside of that basin. Although Pogo is currently focused on the Permian Basin, it may from time to time evaluate and
consummate the acquisition of asset packages that include ancillary properties outside of that basin, which may result in the dilution
of its geographic focus.
Title to the properties in which Pogo is
acquiring an interest may be impaired by title defects.
Pogo is not required to, and
under certain circumstances it may elect not to, incur the expense of retaining lawyers to examine the title to its operating interests.
In such cases, Pogo would rely upon the judgment of oil and gas lease brokers or landmen who perform the fieldwork in examining records
in the appropriate governmental office before acquiring an operating interest. The existence of a material title deficiency can render
an interest worthless and can materially adversely affect Pogo's results of operations, financial condition and cash flows. No assurance
can be given that Pogo will not suffer a monetary loss from title defects or title failure. Additionally, undeveloped acreage has a greater
risk of title defects than developed acreage. If there are any title defects in properties in which Pogo holds an interest, it may suffer
a financial loss.
10
Pogo depends on various services for the
development and production activities on the properties it operates. Substantially all Pogo's revenue is derived from these producing
properties. A reduction in the expected number of wells to be developed on Pogo's acreage by or the failure of Pogo to develop and
operate the wells on its acreage could have an adverse effect on its results of operations and cash flows adequately and efficiently.
Pogo's assets consists
of operating interests. The failure of Pogo to perform operations adequately or efficiently or to act in ways that are not in Pogo's
best interests could reduce production and revenues. Additionally, certain investors have requested that operators adopt initiatives to
return capital to investors, which could also reduce the capital available to Pogo for investment in development and production activities.
Moreover, should a low commodity price environment incur, Pogo may also opt to reduce development activity that could further reduce production
and revenues.
If production on Pogo acreage
decreases due to decreased development activities, because of a low commodity price environment, limited availability of development capital,
production-related difficulties or otherwise, Pogo's results of operations may be adversely affected. Pogo is not obligated
to undertake any development activities other than those required to maintain their leases on Pogo's acreage. In the absence of
a specific contractual obligation, any development and production activities will be subject to their reasonable discretion (subject to
certain implied obligations to develop imposed by the laws of some states). Pogo could determine to develop wells on Pogo's acreage
than is currently expected. The success and timing of development activities on Pogo's properties, depends on a number of factors
that are largely outside of Pogo's control, including:
●
the capital costs required for development activities on Pogo's acreage, which could be significantly more than anticipated;
●
the ability of Pogo to access capital;
●
prevailing commodity prices;
●
the availability of suitable equipment, production and transportation infrastructure and qualified operating personnel;
●
the availability of storage for hydrocarbons, Pogo's expertise, operating efficiency and financial resources;
●
Pogo's expected return on investment in wells developed on Pogo's acreage as compared to opportunities in other areas;
●
the selection of technology;
●
the selection of counterparties for the marketing and sale of production;
●
and the rate of production of the reserves.
Pogo may elect not to undertake
development activities, or may undertake these activities in an unanticipated fashion, which may result in significant fluctuations in
Pogo's results of operations and cash flows. Sustained reductions in production by Pogo on Pogo's properties may also adversely
affect Pogo's results of operations and cash flows. Additionally, if Pogo were to experience financial difficulty, Pogo might not
be able to pay invoices to continue its operations, which could have a material adverse impact on Pogo's cash flows.
11
Pogo's future success depends on replacing
reserves through acquisitions and the exploration and development activities.
Producing crude oil and natural
gas wells are characterized by declining production rates that vary depending upon reservoir characteristics and other factors. Pogo's
future crude oil and natural gas reserves and Pogo's production thereof and Pogo's cash flows are highly dependent on the
successful development and exploitation of Pogo's current reserves and its ability to successfully acquire additional reserves that
are economically recoverable. Moreover, the production decline rates of Pogo's properties may be significantly higher than currently
estimated if the wells on its properties do not produce as expected. Pogo may also not be able to find, acquire or develop additional
reserves to replace the current and future production of its properties at economically acceptable terms. If Pogo is not able to replace
or grow its oil and natural gas reserves, its business, financial condition and results of operations would be adversely affected.
Pogo's failure to successfully identify,
complete and integrate acquisitions of properties or businesses could materially and adversely affect its growth, results of operations
and cash flows.
Pogo depends, in part, on
acquisitions to grow its reserves, production and cash flows. Pogo's decision to acquire a property will depend in part on the evaluation
of data obtained from production reports and engineering studies, geophysical and geological analyses and seismic data, and other information,
the results of which are often inconclusive and subject to various interpretations. The successful acquisition of properties requires
an assessment of several factors, including:
●
recoverable reserves;
●
future crude oil and natural gas prices and their applicable differentials;
●
development plans;
●
operating costs Pogo's E&P operators would incur to develop and operate the properties;
●
and potential environmental and other liabilities that E&P operators may incur.
The accuracy of these assessments
is inherently uncertain and Pogo may not be able to identify attractive acquisition opportunities. In connection with these assessments,
Pogo performs a review of the subject properties that it believes to be generally consistent with industry practices, given the nature
of its interests. Pogo's review will not reveal all existing or potential problems, nor will it permit it to become sufficiently
familiar with the properties to assess fully their deficiencies and capabilities. Inspections are often not performed on every well, and
environmental problems, such as groundwater contamination, are not necessarily observable even when an inspection is undertaken. Even
when problems are identified, the seller may be unwilling or unable to provide effective contractual protection against all or part of
the problems. Even if Pogo does identify attractive acquisition opportunities, it may not be able to complete the acquisition or do so
on commercially acceptable terms. Unless Pogo further develops its existing properties, it will depend on acquisitions to grow its reserves,
production and cash flow.
There is intense competition
for acquisition opportunities in Pogo's industry. Competition for acquisitions may increase the cost of, or cause Pogo to refrain
from, completing acquisitions. Additionally, acquisition opportunities vary over time. Pogo's ability to complete acquisitions is
dependent upon, among other things, its ability to obtain debt and equity financing and, in some cases, regulatory approvals. Further,
these acquisitions may be in geographic regions in which Pogo does not currently hold assets, which could result in unforeseen operating
difficulties. In addition, if Pogo acquires interests in new states, it may be subject to additional and unfamiliar legal and regulatory
requirements. Compliance with regulatory requirements may impose substantial additional obligations on Pogo and its management, cause
it to expend additional time and resources in compliance activities and increase its exposure to penalties or fines for non-compliance with
such additional legal requirements. Further, the success of any completed acquisition will depend on Pogo's ability to effectively
integrate the acquired business into its existing business. The process of integrating acquired businesses may involve unforeseen difficulties
and may require a disproportionate amount of Pogo's managerial and financial resources. In addition, potential future acquisitions
may be larger and for purchase prices significantly higher than those paid for earlier acquisitions.
No assurance can be given
that Pogo will be able to identify suitable acquisition opportunities, negotiate acceptable terms, obtain financing for acquisitions on
acceptable terms or successfully acquire identified targets. Pogo's failure to achieve consolidation savings, to integrate the acquired
assets into its existing operations successfully or to minimize any unforeseen difficulties could materially and adversely affect its
financial condition, results of operations and cash flows. The inability to effectively manage these acquisitions could reduce Pogo's
focus on subsequent acquisitions and current operations, which, in turn, could negatively impact its growth, results of operations and
cash flows.
12
Pogo may acquire properties that do not
produce as projected, and it may be unable to determine reserve potential, identify liabilities associated with such properties or obtain
protection from sellers against such liabilities.
Acquiring crude oil and natural
gas properties requires Pogo to assess reservoir and infrastructure characteristics, including recoverable reserves, development and operating
costs and potential environmental and other liabilities. Such assessments are inexact and inherently uncertain. In connection with the
assessments, Pogo performs a review of the subject properties, but such a review will not necessarily reveal all existing or potential
problems. In the course of Pogo's due diligence, it may not inspect every well or pipeline. Pogo cannot necessarily observe structural
and environmental problems, such as pipe corrosion, when an inspection is made. Pogo may not be able to obtain contractual indemnities
from the seller for liabilities created prior to its purchase of the property. Pogo may be required to assume the risk of the physical
condition of the properties in addition to the risk that the properties may not perform in accordance with its expectations.
Any acquisitions that Pogo completes will
be subject to substantial risks.
Even if Pogo makes acquisitions
that it believes will increase its cash generated from operations, these acquisitions may nevertheless result in a decrease in its cash
flows. Any acquisition involves potential risks, including, among other things:
●
the validity of Pogo's assumptions about estimated proved reserves, future production, prices, revenues, capital expenditures, the operating expenses and costs to develop the reserves;
●
a decrease in Pogo's liquidity by using a significant portion of its cash generated from operations or borrowing capacity to finance acquisitions;
●
a significant increase in Pogo's interest expense or financial leverage if it incurs debt to finance acquisitions;
●
the assumption of unknown liabilities, losses or costs for which Pogo is not indemnified or for which any indemnity it receives is inadequate;
●
mistaken assumptions about the overall cost of equity or debt;
●
Pogo's ability to obtain satisfactory title to the assets it acquires;
●
an inability to hire, train or retain qualified personnel to manage and operate Pogo's growing business and assets;
●
and the occurrence of other significant changes, such as impairment of crude oil and natural gas properties, goodwill or other intangible assets, asset devaluation or restructuring charges.
Pogo's identified development activities
are susceptible to uncertainties that could materially alter the occurrence or timing of their development activities.
The ability of Pogo to perform
development activities depends on a number of uncertainties, including the availability of capital, construction of and limitations on
access to infrastructure, inclement weather, regulatory changes and approvals, crude oil and natural gas prices, costs, development activity
results and the availability of water. Further, Pogo's identified potential development activities are in various stages of evaluation,
ranging from wells that are ready to be developed to wells that require substantial additional interpretation. The use of technologies
and the study of producing fields in the same area will not enable Pogo to know conclusively prior to development activities whether crude
oil and natural gas will be present or, if present, whether crude oil and natural gas will be present in sufficient quantities to be economically
viable. Even if enough crude oil or natural gas exist, Pogo may damage the potentially productive hydrocarbon-bearing formation or
experience mechanical difficulties while performing development activities, possibly resulting in a reduction in production from the well
or abandonment of the well. If Pogo performs additional development activities on wells that do not respond or they produce at quantities
less than desired these wells may materially harm Pogo's business.
There is no guarantee that
the conclusions Pogo draws from available data and other wells near the Pogo acreage will be applicable to Pogo's development activities.
Further, initial production rates reported by Pogo in the areas in which Pogo's reserves are located may not be indicative of future
or long-term production rates. Additionally, actual production from wells may be less than expected. For example, a number of E&P
operators have recently announced that newer wells drilled close in proximity to already producing wells have produced less oil and gas
than forecast. Because of these uncertainties, Pogo does not know if the potential development activities that have been identified will
ever be able to produce crude oil and natural gas from these or any other potential development activities. As such, the actual development
activities of Pogo may materially differ from those presently identified, which could adversely affect Pogo's business, results
of operation and cash flows.
13
Acquisitions and Pogo's development
of Pogo's leases will require substantial capital, and our company may be unable to obtain needed capital or financing on satisfactory
terms or at all.
The crude oil and natural
gas industry is capital intensive. Pogo made substantial capital expenditures in connection with the acquisition and development of its
properties. Our company may continue to make substantial capital expenditures in connection with the acquisition and development of properties.
Our company will finance capital expenditures primarily with funding from cash generated by operations and borrowings under its revolving
credit facility.
In the future, Pogo may need
capital more than the amounts it retains in its business or borrows under its revolving credit facility. The level of borrowing base available
under Pogo's revolving credit facility is largely based on its estimated proved reserves and its lenders' price decks and
underwriting standards in the reserve-based lending space and may be reduced to the extent commodity prices decrease and cause underwriting
standards to tighten or the lending syndication market is not sufficiently liquid to obtain lender commitments to a full borrowing base
in an amount appropriate for Pogo's assets. Furthermore, Pogo cannot assure you that it will be able to access other external capital
on terms favorable to it or at all. For example, a significant decline in prices for crude oil and broader economic turmoil may adversely
impact Pogo's ability to secure financing in the capital markets on favorable terms. Additionally, Pogo's ability to secure
financing or access the capital markets could be adversely affected if financial institutions and institutional lenders elect not to provide
funding for fossil fuel energy companies in connection with the adoption of sustainable lending initiatives or are required to adopt policies
that have the effect of reducing the funding available to the fossil fuel sector. If Pogo is unable to fund its capital requirements,
Pogo may be unable to complete acquisitions, take advantage of business opportunities or respond to competitive pressures, any of which
could have a material adverse effect on its results of operation and free cash flow.
Pogo is also dependent on
the availability of external debt, equity financing sources and operating cash flows to maintain its development program. If those financing
sources are not available on favorable terms or at all, then Pogo expects the development of its properties to be adversely affected.
If the development of Pogo's properties is adversely affected, then revenues from Pogo's operations may decline. If we issue
additional equity securities or securities convertible into equity securities, existing stockholders will experience dilution and the
new equity securities could have rights senior to those of our Class A Common Stock.
The widespread outbreak of an illness, pandemic
(like COVID-19) or any other public health crisis may have material adverse effects on Pogo's business, financial position, results
of operations and/or cash flows.
Pogo faces risks related to
the outbreak of illnesses, pandemics and other public health crises that are outside of its control and could significantly disrupt its
operations and adversely affect its financial condition. For example, the COVID-19 pandemic has caused a disruption to the oil and
natural gas industry and to Pogo's business. The COVID-19 pandemic negatively impacted the global economy, disrupted global
supply chains, reduced global demand for oil and gas, and created significant volatility and disruption of financial and commodity markets,
but has been improving since 2020.
The degree to which the COVID-19 pandemic
or any other public health crisis adversely impacts Pogo's operations, financial results and dividend policy will also depend on
future developments, which are highly uncertain and cannot be predicted. These developments include, but are not limited to, the duration
and spread of the pandemic, its severity, the actions to contain the virus or treat its impact, its impact on the economy and market conditions,
and how quickly and to what extent normal economic and operating conditions can resume. While this matter may disrupt its operations in
some way, the degree of the adverse financial impact cannot be reasonably estimated at this time.
14
Pogo currently plans to enter hedging
arrangements with respect to the production of crude oil, and possibly natural gas which is a smaller portion of the reserves. Pogo will
mitigate the exposure to the impact of decreases in the prices by establishing a hedging plan and structure that protects the earnings
to a reasonable level, and the debt service requirements.
Pogo does currently plan to
enter into hedging arrangements to establish, in advance, a price for the sale of the crude oil and possibly natural gas produced from
its properties. The hedging plan and structure will be at a level to balance the debt service requirements and also allow Pogo to realize
the benefit of any short-term increase in the price of crude oil and natural gas. A portion of the crude oil and natural gas produced
from its properties will not be protected against decreases in the price of crude oil and natural gas, or prolonged periods of low commodity
prices. Hedging arrangements may limit Pogo's ability to realize the benefit of rising prices and may result in hedging losses.
The intent of the hedging
arrangements is to mitigate the volatility in its cash flows due to fluctuations in the price of crude oil and natural gas. However, these
hedging activities may not be as effective as our company intends in reducing the volatility of its cash flows and, if entered into, are
subject to the risks of the terms of the derivative instruments derivative contract, there may be a change in the expected differential
between the underlying commodity price in the derivative instrument and the actual price received, our company's hedging policies
and procedures may not be properly followed and the steps our company takes to monitor its derivative financial instruments may not detect
and prevent violations of its risk management policies and procedures, particularly if deception or other intentional misconduct is involved.
Further, our company may be limited in receiving the full benefit of increases in crude oil as a result of these hedging transactions.
The occurrence of any of these risks could prevent Pogo from realizing the benefit of a derivative contract.
Pogo's estimated reserves are based
on many assumptions that may turn out to be inaccurate. Any material inaccuracies in these reserve estimates or underlying assumptions
will materially affect the quantities and present value of its reserves.
It is not possible to measure
underground accumulation of crude oil and natural gas in an exact way. Crude oil and natural gas reserve engineering is not an exact science
and requires subjective estimates of underground accumulations of crude oil and natural gas and assumptions concerning future crude oil
and natural gas prices, production levels, ultimate recoveries and operating and development costs. As a result, estimated quantities
of proved reserves, projections of future production rates and the timing of development expenditures may turn out to be incorrect. Estimates
of Pogo's proved reserves and related valuations as of December 31, 2023 and December 31, 2022 were prepared by Cobb &
Associates. Cobb & Associates conducted a detailed review of all of Pogo's properties for the period covered by its reserve
report using information provided by Pogo. Over time, Pogo may make material changes to reserve estimates taking into account the results
of actual drilling, testing and production and changes in prices. In addition, certain assumptions regarding future crude oil and natural
gas prices, production levels and operating and development costs may prove incorrect. For example, due to the deterioration in commodity
prices and operator activity in 2020 as a result of the COVID-19 pandemic and other factors, the commodity price assumptions used
to calculate Pogo's reserves estimates declined, which in turn lowered its proved reserve estimates. A substantial portion of Pogo's
reserve estimates are made without the benefit of a lengthy production history, which are less reliable than estimates based on a lengthy
production history. Any significant variance from these assumptions to actual figures could greatly affect Pogo's estimates of reserves
and future cash generated from operations. Numerous changes over time to the assumptions on which Pogo's reserve estimates are based,
as described above, often result in the actual quantities of crude oil and natural gas that are ultimately recovered being different from
its reserve estimates.
Furthermore, the present value
of future net cash flows from Pogo's proved reserves is not necessarily the same as the current market value of its estimated reserves.
In accordance with rules established by the SEC and the Financial Accounting Standards Board (the "FASB"), Pogo bases the
estimated discounted future net cash flows from its proved reserves on the twelve-month average oil and gas index prices, calculated
as the unweighted arithmetic average for the first-day-of-the-month price for each month, and costs in effect on the date of the
estimate, holding the prices and costs constant throughout the life of the properties. Actual future prices and costs may differ materially
from those used in the present value estimate, and future net present value estimates using then current prices and costs may be significantly
less than the current estimate. In addition, the 10% discount factor Pogo uses when calculating discounted future net cash flows may not
be the most appropriate discount factor based on interest rates in effect from time to time and risks associated with Pogo or the crude
oil and natural gas industry in general.
15
Operating hazards and partially insured
or uninsured risks may result in substantial losses to Pogo and any losses could adversely affect Pogo's results of operations and
cash flows.
The operations of Pogo will
be subject to all of the hazards and operating risks associated with drilling for and production of crude oil and natural gas, including
the risk of fire, explosions, blowouts, surface cratering, uncontrollable flows of crude oil and natural gas and formation water, pipe
or pipeline failures, abnormally pressured formations, casing collapses and environmental hazards such as crude oil spills, natural gas
leaks and ruptures or discharges of toxic gases. In addition, their operations will be subject to risks associated with hydraulic fracturing,
including any mishandling, surface spillage or potential underground migration of fracturing fluids, including chemical additives. The
occurrence of any of these events could result in substantial losses to Pogo due to injury or loss of life, severe damage to or destruction
of property, natural resources and equipment, pollution or other environmental damage, clean-up responsibilities, regulatory investigations
and penalties, suspension of operations and repairs required to resume operations.
Loss of Pogo's information and computer
systems, including as a result of cyber-attacks, could materially and adversely affect Pogo's business.
Pogo relies on electronic
systems and networks to control and manage Pogo's respective businesses. If any of such programs or systems were to fail for any
reason, including as a result of a cyber-attack, or create erroneous information in Pogo's hardware or software network infrastructure,
possible consequences could be significant, including loss of communication links and inability to automatically process commercial transaction
or engage in similar automated or computerized business activities. Although Pogo has multiple layers of security to mitigate risks of
cyber-attacks, cyber-attacks on business have escalated in recent years. Moreover, Pogo is becoming increasingly dependent on
digital technologies to conduct certain exploration, development, production and processing activities, including interpreting seismic
data, managing drilling rigs, production activities and gathering systems, conducting reservoir modeling and estimating reserves. The
U.S. government has issued public warnings that indicate that energy assets might be specific targets of cyber security threats.
If Pogo becomes the target of cyber-attacks of information security breaches, their business operations may be substantially disrupted,
which could have an adverse effect on Pogo's results of operations. In addition, Pogo's efforts to monitor, mitigate and manage
these evolving risks may result in increased capital and operating costs, and there can be no assurance that such efforts will be sufficient
to prevent attacks or breaches from occurring.
A terrorist attack or armed conflict could
harm Pogo's business.
Terrorist activities, anti-terrorist activities
and other armed conflicts involving the United States or other countries may adversely affect the United States and global economies
and could prevent Pogo from meeting its financial and other obligations. For example, on February 24, 2022, Russia launched a large-scale invasion
of Ukraine that has led to significant armed hostilities. As a result, the United States, the United Kingdom, the member states of
the European Union and other public and private actors have levied severe sanctions on Russia. To date, this conflict has resulted in
a decreased supply of hydrocarbons which has resulted in higher commodity prices. The geopolitical and macroeconomic consequences of this
invasion and associated sanctions cannot be predicted, and such events, or any further hostilities in Ukraine or elsewhere, could severely
impact the world economy. If any of these events occur, the resulting political instability and societal disruption could reduce overall
demand for crude oil and natural gas potentially putting downward pressure on demand for Pogo's services and causing a reduction
in its revenues. Crude oil and natural gas related facilities, including those of Pogo, could be direct targets of terrorist attacks,
and, if infrastructure integral to Pogo is destroyed or damaged, they may experience a significant disruption in their operations. Any
such disruption could materially adversely affect Pogo's financial condition, results of operations and cash flows. Costs for insurance
and other security may increase as a result of these threats, and some insurance coverage may become more difficult to obtain, if available
at all.
We believe Pogo currently has ineffective
internal control over its financial reporting.
A material weakness is a deficiency,
or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material
misstatement of Pogo's annual or interim consolidated financial statements may not be prevented or detected on a timely basis. We
identified a material weakness and believe that Pogo currently has ineffective internal control over financial reporting, primarily due
to: not maintaining a sufficient complement of personnel to permit segregation of duties among personnel with access to Pogo's accounting
and information systems controls, lacking proper review evidence of controls over the reserves report prepared by the reservoir engineer,
and lacking the controls needed to ensure that the accounting for certain items is accurate and complete.
16
We intend to remediate these
deficiencies by putting into place proper internal controls and accounting systems to ensure effective internal control over its financial
reporting. Completion of remediation does not provide assurance that our remediation or other controls will continue to operate properly
or remain adequate and we cannot assure you that we will not identify additional material weaknesses in our internal control over financial
reporting in the future. If we are unable to maintain effective internal control over financial reporting or disclosure controls and procedures,
our ability to record, process and report financial information accurately, and to prepare financial statements within the time periods
specified by the rules and forms of the SEC, could be adversely affected. This failure could negatively affect the market price and trading
liquidity of our stock, cause investors to lose confidence in our reported financial information, subject us to civil and criminal investigations
and penalties and generally materially and adversely impact our business and financial condition.
Our independent registered public accounting
firm's report contains an explanatory paragraph that expresses substantial doubt about our ability to continue as a "going
concern."
As of September 30, 2024,
we had $2,746,896 in cash and a working capital deficit of $38,801,444. Further, we had positive cash flow from operations of $3,346,362
for the nine months ended September 30, 2024. These factors raise substantial doubt about our 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 the Common Stock
Purchase Agreement with White Lion, which can fund our operations and production growth, and be used to reduce our liabilities. While
there can be no assurance of success, our management believes that its plans and the overall outlook of the oil and gas industry sufficiently
alleviate the factors raising substantial doubt about its ability to continue as a going concern.
We are dependent upon our executive officers
and directors and their departure could adversely affect our ability to operate.
Our operations are dependent
upon a relatively small group of individuals. We believe that our success depends on the continued service of our executive officers and
directors. In addition, our executive officers and directors are not required to commit any specified amount of time to our affairs and,
accordingly, will have conflicts of interest in allocating management time among various business activities. The unexpected loss of the
services of one or more of our directors or executive officers could have a detrimental effect on us.
Certain of our executive officers and directors
are now, and all of them may in the future become, affiliated with entities engaged in business activities similar to those conducted
by us.
Our executive officers and
directors are, or may in the future become, affiliated with entities that are engaged in business activities similar to our own.
Our officers and directors
also may become aware of business opportunities which may be appropriate for presentation to us and the other entities to which they owe
certain fiduciary or contractual duties. Accordingly, they may have conflicts of interest in determining to which entity a particular
business opportunity should be presented. These conflicts may not be resolved in our favor and a potential target business may be presented
to another entity prior to its presentation to us. Our Second A&R Charter provides that we renounce our interest in any corporate
opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity
as a director or officer of our company and such opportunity is one we are legally and contractually permitted to undertake and would
otherwise be reasonable for us to pursue.
Our executive officers, directors, security
holders and their respective affiliates may have competitive pecuniary interests that conflict with our interests.
We have not adopted a policy
that expressly prohibits our directors, executive officers, security holders or affiliates from having a direct or indirect pecuniary
or financial interest in any investment to be acquired or disposed of by us or in any transaction to which we are a party or have an interest.
We also do not have a policy that expressly prohibits any such persons from engaging for their own account in business activities of the
types conducted by us. Accordingly, such persons or entities may have a conflict between their interests and ours.
17
Increased costs of capital could adversely
affect Pogo's business.
Pogo's business and
ability to make acquisitions could be harmed by factors such as the availability, terms, and cost of capital, increases in interest rates
or a reduction in its credit rating. Changes in any one or more of these factors could cause Pogo's cost of doing business to increase,
limit its access to capital, limit its ability to pursue acquisition opportunities, and place it at a competitive disadvantage. A significant
reduction in the availability of capital could materially and adversely affect Pogo's ability to achieve its planned growth and
operating results.
For example, during 2022 and
the first half of 2023, the Federal Reserve raised the target range for the federal funds rate by 525 basis points to a range of 5.25%
to 5.50% as of August, 2023. Furthermore, the Federal Reserve has signaled that additional rate increases are likely to occur for the
foreseeable future. An increase in the interest rates associated with our floating rate debt would increase our debt service costs and
affect our results of operations and cash flow available for payments of our debt obligations. In addition, an increase in interest rates
could adversely affect our future ability to obtain financing or materially increase the cost of any additional financing.
Pogo may be involved in legal proceedings
that could result in substantial liabilities.
Like many crude oil and natural
gas companies, Pogo may from time to time be involved in various legal and other proceedings, such as title, royalty or contractual disputes,
regulatory compliance matters and personal injury or property damage matters, in the ordinary course of its business. Such legal proceedings
are inherently uncertain and their results cannot be predicted. Regardless of the outcome, such proceedings could have an adverse impact
on Pogo because of legal costs, diversion of management and other personnel and other factors. In addition, it is possible that a resolution
of one or more such proceedings could result in liability, penalties or sanctions, as well as judgments, consent decrees or orders requiring
a change in Pogo's business practices, which could materially and adversely affect its business, operating results and financial
condition. Accruals for such liability, penalties or sanctions may be insufficient. Judgments and estimates to determine accruals or range
of losses related to legal and other proceedings could change from one period to the next, and such changes could be material.
The historical financial results of EON
and the unaudited pro forma condensed consolidated combined financial information included elsewhere in this report may not be indicative
of what EON's actual financial position or results of operations would have been if it were a public company.
The historical financial results
of EON included in this report do not reflect the financial condition, results of operations or cash flows it would have achieved as a
public company during the periods presented or those we will achieve in the future. Our future financial condition, results of operations
and cash flows could be materially different from amounts reflected in EON's historical financial statements included elsewhere
in this report. As such, it may be difficult for investors to compare our future results to historical results or to evaluate its relative
performance or trends in its business.
Similarly, the unaudited pro
forma condensed consolidated combined financial information in this report is presented for illustrative purposes only and has been prepared
based on a number of assumptions including, but not limited to, those assumptions described in the accompanying unaudited pro forma condensed
consolidated combined financial statements. Accordingly, such pro forma financial information may not be indicative of our future operating
or financial performance and our actual financial condition and results of operations may vary materially from the pro forma results
of operations and balance sheet contained elsewhere in this report, including as a result of such assumptions not being accurate.
18
Risks Related to Our Industry
A substantial majority of Pogo's revenues
from crude oil and gas producing activities are derived from its operating properties that are based on the price at which crude oil and
natural gas produced from the acreage underlying its interests are sold. Prices of crude oil and natural gas are volatile due to factors
beyond Pogo's control. A substantial or extended decline in commodity prices may adversely affect Pogo's business, financial
condition, results of operations and cash flows.
Pogo's revenues, operating
results, discretionary cash flows, profitability, liquidity and the carrying value of its interests depend significantly upon the prevailing
prices for crude oil and natural gas. Historically, crude oil and natural gas prices and their applicable basis differentials have been
volatile and are subject to fluctuations in response to changes in supply and demand, market uncertainty and a variety of additional factors
that are beyond Pogo's control, including:
●
the regional, domestic foreign supply of and demand for crude oil and natural gas;
●
the level of prices and market expectations about future prices of crude oil and natural gas;
●
the level of global crude oil and natural gas E&P;
●
the cost of exploring for, developing, producing and delivering crude oil and natural gas;
●
the price and quantity of foreign imports and U.S. exports of crude oil and natural gas;
●
the level of U.S. domestic production;
●
political and economic conditions and events in foreign oil and natural gas producing countries, including embargoes, continued hostilities in the Middle East and other sustained military campaigns, the armed conflict in Ukraine and associated economic sanctions on Russia, conditions in South America, Central America and China and acts of terrorism or sabotage;
●
global or national health concerns, including the outbreak of an illness pandemic (like COVID-19), which may reduce demand for crude oil and natural gas due to reduced global or national economic activity;
●
the ability of members of OPEC and its allies and other oil exporting nations to agree to and maintain crude oil price and production controls;
●
speculative trading in crude oil and natural gas derivative contracts;
●
the level of consumer product demand;
●
weather conditions and other natural disasters, such as hurricanes and winter storms, the frequency and impact of which could be increased by the effects of climate change;
●
technological advances affecting energy consumption, energy storage and energy supply;
●
domestic and foreign governmental regulations and taxes;
●
the continued threat of terrorism and the impact of military and other action, including U.S. military operations in the Middle East and economic sanctions such as those imposed by the U.S. on oil and gas exports from Iran;
●
the proximity, cost, availability and capacity of crude oil and natural gas pipelines and other transportation facilities;
●
the impact of energy conservation efforts;
●
the price and availability of alternative fuels; and
●
overall domestic and global economic conditions.
19
These factors and the volatility
of the energy markets make it extremely difficult to predict future crude oil and natural gas price movements with any certainty. For
example, during the past five years, the posted price for West Texas Intermediate ("WTI") light sweet crude oil has ranged
from a historic, record low price of negative ($36.98) per barrel ("Bbl") in April 2020 to a high of $123.64 per Bbl
in March 2022, and the Henry Hub spot market price for natural gas has ranged from a low of $1.33 per metric million British thermal
unit ("MMBtu") in September 2020 to a high of $23.86 per MMBtu in February 2021. Certain actions by OPEC+ in the
first half of 2020, combined with the impact of the continued outbreak of the COVID-19 pandemic and a shortage in available storage
for hydrocarbons in the U.S., contributed to the historic low price for crude oil in April 2020. While the prices for crude oil have
begun to stabilize and also increase, such prices have historically remained volatile, which has adversely affected the prices at which
production from Pogo's properties is sold and may continue to do so in the future. This, in turn, has and will materially affect
the amount of production payments that Pogo receives.
Any substantial decline in
the price of crude oil and natural gas, or prolonged period of low commodity prices will materially adversely affect Pogo's business,
financial condition, results of operations and cash flows. In addition, lower crude oil and natural gas may reduce the amount of crude
oil and natural gas that can be produced economically, which may reduce its Pogo's willingness to develop its properties. This may
result in Pogo having to make substantial downward adjustments to its estimated proved reserves, which could negatively impact its ability
to fund its operations. If this occurs or if production estimates change or exploration or development results deteriorate, the successful
efforts method of accounting principles may require Pogo to write down, as a non-cash charge to earnings, the carrying value of its
crude oil and natural gas properties. Pogo could also determine during periods of low commodity prices to shut in or curtail production
from wells on Pogo's properties. In addition, Pogo could determine during periods of low commodity prices to plug and abandon marginal
wells that otherwise may have been allowed to continue to produce for a longer period under conditions of higher prices. Specifically,
they may abandon any well if they reasonably believe that the well can no longer produce crude oil or natural gas in commercially paying
quantities. Pogo may choose to use various derivative instruments in connection with anticipated crude oil and natural gas to minimize
the impact of commodity price fluctuations. However, Pogo cannot hedge the entire exposure of its operations from commodity price volatility.
To the extent Pogo does not hedge against commodity price volatility, or its hedges are not effective, Pogo's results of operations
and financial position may be diminished.
If commodity prices decrease to a level
such that Pogo's future undiscounted cash flows from its properties are less than their carrying value, Pogo may be required to
take write-downs of the carrying values of its properties.
Accounting rules require that
Pogo periodically review the carrying value of its properties for possible impairment. Based on specific market factors and circumstances
at the time of prospective impairment reviews, production data, economics and other factors, Pogo may be required to write down the carrying
value of its properties. Pogo evaluates the carrying amount of its proved oil and natural gas properties for impairment whenever events
or changes in circumstances indicate that a property's carrying amount may not be recoverable. If the carrying value exceeds the
estimated undiscounted future cash flows Pogo would estimate the fair value of its properties and record an impairment charge for any
excess of the carrying value of the properties over the estimated fair value of the properties. Factors used to estimate fair value may
include estimates of proved reserves, future commodity prices, future production estimates and a commensurate discount rate. The risk
that Pogo will be required to recognize impairments of its crude oil and natural gas properties increases during periods of low commodity
prices. In addition, impairments would occur if Pogo were to experience sufficient downward adjustments to its estimated proved reserves
or the present value of estimated future net revenues. An impairment recognized in one period may not be reversed in a subsequent period.
Pogo may incur impairment charges in the future, which could materially adversely affect its results of operations for the periods in
which such charges are taken.
20
The unavailability, high cost or shortages
of rigs, equipment, raw materials, supplies or personnel may restrict or result in increased costs to develop and operate Pogo's
properties.
The crude oil and natural
gas industry is cyclical, which can result in shortages of drilling/workover rigs, equipment, raw materials (particularly water and sand
and other proppants), supplies and personnel. When shortages occur, the costs and delivery times of rigs, equipment and supplies increase
and demand for, and wage rates of, qualified drilling/workover rig crews also rise with increases in demand. Pogo cannot predict whether
these conditions will exist in the future and, if so, what their timing and duration will be. In accordance with customary industry practice,
Pogo relies on independent third-party service providers to provide many of the services and equipment necessary to drill new development
wells. If Pogo is unable to secure a sufficient number of drilling/workover rigs at reasonable costs, Pogo's financial condition
and results of operations could suffer. Shortages of drilling/workover rigs, equipment, raw materials, supplies, personnel, trucking services,
tubulars, hydraulic fracturing and completion services and production equipment could delay or restrict Pogo's development operations,
which in turn could have a material adverse effect on Pogo's financial condition, results of operations and cash flows.
The marketability of crude oil and natural
gas production is dependent upon transportation and processing and refining facilities, which Pogo cannot control. Any limitation in the
availability of those facilities could interfere with Pogo's ability to market its production and could harm Pogo's business.
The marketability of Pogo's
production depends in part on the availability, proximity and capacity of pipelines, gathering lines, tanker trucks and other transportation
methods, and processing and refining facilities owned by third parties. Pogo does not control these third-party facilities and Pogo's
access to them may be limited or denied. Insufficient production from the wells on Pogo's acreage or a significant disruption in
the availability of third-party transportation facilities or other production facilities could adversely impact Pogo's ability
to deliver, to market or produce oil and natural gas and thereby cause a significant interruption in Pogo's operations. If they
are unable, for any sustained period, to implement acceptable delivery or transportation arrangements or encounter production related
difficulties, they may be required to shut in or curtail production. In addition, the amount of crude oil that can be produced and sold
is subject to curtailment in certain other circumstances outside of Pogo's control, such as pipeline interruptions due to scheduled
and unscheduled maintenance, excessive pressure, physical damage or lack of available capacity on these systems, tanker truck availability
and extreme weather conditions. Also, production from Pogo's wells may be insufficient to support the construction of pipeline facilities,
and the shipment of Pogo's crude oil and natural gas on third-party pipelines may be curtailed or delayed if it does not meet
the quality specifications of the pipeline owners. The curtailments arising from these and similar circumstances may last from a few days
to several months. In many cases, Pogo is provided only with limited, if any, notice as to when these circumstances will arise and
their duration. Any significant curtailment in gathering system or transportation, processing or refining-facility capacity, or an
inability to obtain favorable terms for delivery of the crude oil and natural gas produced from Pogo's acreage, could reduce Pogo's
ability to market the production from Pogo's properties and have a material adverse effect on Pogo's financial condition,
results of operations and cash flows. Pogo's access to transportation options and the prices Pogo receives can also be affected
by federal and state regulation — including regulation of crude oil and natural gas production, transportation and pipeline
safety — as well by general economic conditions and changes in supply and demand.
In addition, the third parties
on whom Pogo relies for transportation services are subject to complex federal, state, tribal and local laws that could adversely affect
the cost, manner or feasibility of conducting Pogo's business.
21
Drilling for and producing crude oil and
natural gas are high-risk activities with many uncertainties that may materially adversely affect Pogo's business, financial condition,
results of operations and cash flows.
The development drilling activities
of Pogo's properties will be subject to many risks. For example, Pogo will not be able to assure you that wells drilled by the E&P
operators of its properties will be productive. Drilling for crude oil and natural gas often involves unprofitable efforts, not only from
dry wells but also from wells that are productive but do not produce sufficient crude oil and natural gas to return a profit at then realized
prices after deducting drilling, operating and other costs. The seismic data and other technologies used do not provide conclusive knowledge
prior to drilling a well that crude oil and natural gas are present or that a well can be produced economically. The costs of exploration,
exploitation and development activities are subject to numerous uncertainties beyond Pogo's control and increases in those costs
can adversely affect the economics of a project. Further, Pogo's development drilling and producing operations may be curtailed,
delayed, canceled or otherwise negatively impacted as a result of other factors, including:
●
unusual or unexpected geological formations;
●
loss of drilling fluid circulation;
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title problems;
●
facility or equipment malfunctions;
●
unexpected operational events;
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shortages or delivery delays of equipment and services;
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compliance with environmental and other governmental requirements; and
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adverse weather conditions, including the recent winter storms in February 2021 that adversely affected operator activity and production volumes in the southern United States, including in the Delaware Basin.
Any of these risks can cause
substantial losses, including personal injury or loss of life, damage to or destruction of property, natural resources and equipment,
pollution, environmental contamination or loss of wells and other regulatory penalties. In the event that planned operations, including
the drilling of development wells, are delayed or cancelled, or existing wells or development wells have lower than anticipated production
due to one or more of the factors above or for any other reason, Pogo's financial condition, results of operations and cash flows
may be materially adversely affected.
Competition in the crude oil and natural
gas industry is intense, which may adversely affect Pogo's ability to succeed.
The crude oil and natural
gas industry is intensely competitive, and Pogo's properties compete with other companies that may have greater resources. Many
of these companies explore for and produce crude oil and natural gas, carry on midstream and refining operations, and market petroleum
and other products on a regional, national or worldwide basis. In addition, these companies may have a greater ability to continue exploration
activities during periods of low crude oil and natural gas market prices. Pogo's larger competitors may be able to absorb the burden
of present and future federal, state, local and other laws and regulations more easily than Pogo can, which would adversely affect Pogo's
competitive position. Pogo may have fewer financial and human resources than many companies in Pogo's industry and may be at a disadvantage
in bidding producing crude oil and natural gas properties. Furthermore, the crude oil and natural gas industry has experienced recent
consolidation among some operators, which has resulted in certain instances of combined companies with larger resources. Such combined
companies may compete against Pogo and thus limit Pogo's ability to acquire additional properties and add reserves.
A deterioration in general economic, business,
political or industry conditions would materially adversely affect Pogo's results of operations, financial condition and cash flows.
Concerns over global economic
conditions, energy costs, geopolitical issues, the impacts of the COVID-19 pandemic, inflation, the availability and cost of credit
and slow economic growth in the United States have contributed to economic uncertainty and diminished expectations for the global
economy. Additionally, acts of protest and civil unrest have caused economic and political disruption in the United States. Meanwhile,
continued hostilities in the Middle East, Ukraine and the occurrence or threat of terrorist attacks in the United States or other
countries could adversely affect the economies of the United States and other countries. Concerns about global economic growth have
had a significant adverse impact on global financial markets and commodity prices. An oversupply and decreased demand of crude oil in
2020 led to a severe decline in worldwide crude oil prices in 2020.
If the economic climate in
the United States or abroad deteriorates, worldwide demand for petroleum products could further diminish, which could impact the
price at which crude oil and natural gas from Pogo's properties are sold, affect the ability of Pogo's to continue operations
and ultimately materially adversely impact Pogo's results of operations, financial condition and cash flows.
22
Conservation measures, technological advances
and increasing attention to ESG matters could materially reduce demand for crude oil and natural gas, availability of capital and adversely
affect Pogo's results of operations.
Fuel conservation measures,
alternative fuel requirements, increasing consumer demand for alternatives to crude oil and natural gas, technological advances in fuel
economy and energy-generation devices could reduce demand for crude oil and natural gas. The impact of the changing demand for crude
oil and natural gas services and products may have a material adverse effect on Pogo's business, financial condition, results of
operations and cash flows. It is also possible that the concerns about the production and use of fossil fuels will reduce the sources
of financing available to Pogo. For example, certain segments of the investor community have developed negative sentiment towards
investing in the oil and gas industry. Recent equity returns in the sector versus other industry sectors have led to lower oil and gas
representation in certain key equity market indices. In addition, some investors, including investment advisors and certain sovereign
wealth, pension funds, university endowments and family foundations, have stated policies to divest from, or not provide funding to, the
oil and gas sector based on their social and environmental considerations. Furthermore, organizations that provide information to investors
on corporate governance and related matters have developed ratings processes for evaluating companies on their approach to environmental,
social and governance ("ESG") matters. Such ratings are used by some investors and other financial institutions to inform
their investment, financing and voting decisions, and unfavorable ESG ratings may lead to increased negative sentiment toward oil and
gas companies from such institutions. Additionally, the SEC proposed rules on climate change disclosure requirements for public companies
which, if adopted as proposed, could result in substantial compliance costs. Certain other stakeholders have also pressured commercial
and investment banks to stop financing oil and gas and related infrastructure projects. Such developments, including environmental activism
and initiatives aimed at limiting climate change and reducing air pollution, could result in downward pressure on the stock prices of
oil and gas companies, and also adversely affect Pogo's availability of capital.
Risks Related to Environmental and Regulatory Matters
Crude oil and natural gas operations are
subject to various governmental laws and regulations. Compliance with these laws and regulations can be burdensome and expensive for Pogo,
and failure to comply could result in Pogo incurring significant liabilities, either of which may impact its willingness to develop Pogo's
interests.
Pogo's activities on
the properties in which Pogo holds interests are subject to various federal, state and local governmental regulations that may change
from time to time in response to economic and political conditions. Matters subject to regulation include drilling operations, production
and distribution activities, discharges or releases of pollutants or wastes, plugging and abandonment of wells, maintenance and decommissioning
of other facilities, the spacing of wells, unitization and pooling of properties and taxation. From time to time, regulatory agencies
have imposed price controls and limitations on production by restricting the rate of flow of crude oil and natural gas wells below actual
production capacity to conserve supplies of crude oil and natural gas. For example, in January 2021, President Biden signed an Executive
Order that, among other things, instructed the Secretary of the Interior to pause new oil and natural gas leases on public lands or in
offshore waters pending completion of a comprehensive review and reconsideration of federal oil and natural gas permitting and leasing
practices. In August 2022, a federal judge in Louisiana issued a permanent injunction against the temporary halt to the leasing of federal
lands for oil and gas drilling in the thirteen states that challenged the Executive Order. In April 2022, the Biden Administration announced
it would resume selling leases to drill for oil and gas on federal lands, but with an 80% reduction in the number of acres offered and
an increase in the royalties companies must pay to drill. The Inflation Reduction Act, signed into law in August of 2022, expanded oil
and gas lease sales off the coast of Alaska and in the Gulf of Mexico. Substantially all of Pogo's interests are located on state
or federal lands, therefore Pogo cannot predict the full impact of these developments or whether the Biden Administration may pursue further
restrictions. President Biden also issued an Executive Order directing all federal agencies to review and take action to address any federal
regulations, orders, guidance documents, policies and any similar agency actions during the prior administration that may be inconsistent
with the current administration's policies. The United States Environmental Protection Agency has proposed strict new methane emission
regulations for certain oil and gas facilities and the IRA establishes a charge on methane emissions above certain limits from the same
facilities. Further actions of President Biden, and the Biden Administration, including actions focused on addressing climate change,
may negatively impact oil and gas operations and favor renewable energy projects in the United States, which may negatively impact
the demand for oil and natural gas.
23
In addition, the production,
handling, storage and transportation of crude oil and natural gas, as well as the remediation, emission and disposal of crude oil and
natural gas wastes, by-products thereof and other substances and materials produced or used in connection with crude oil and natural
gas operations are subject to regulation under federal, state and local laws and regulations primarily relating to protection of worker
health and safety, natural resources and the environment. Failure to comply with these laws and regulations may result in the assessment
of sanctions on Pogo, including administrative, civil or criminal penalties, permit revocations, requirements for additional pollution
controls and injunctions limiting or prohibiting some or all of Pogo's operations on its properties. Moreover, these laws and regulations
have generally imposed increasingly strict requirements related to water use and disposal, air pollution control, species protection,
and waste management, among other matters.
Laws and regulations governing
E&P may also affect production levels. Pogo must comply with federal and state laws and regulations governing conservation matters,
including, but not limited to:
●
provisions related to the unitization or pooling of the crude oil and natural gas properties;
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the establishment of maximum rates of production from wells;
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the spacing of wells;
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the plugging and abandonment of wells; and
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the removal of related production equipment.
Additionally, federal and
state regulatory authorities may expand or alter applicable pipeline-safety laws and regulations, compliance with which may require
increased capital costs for third-party crude oil and natural gas transporters. These transporters may attempt to pass on such costs
to Pogo, which in turn could affect profitability on the properties in which Pogo owns an interest.
Pogo must also comply with
laws and regulations prohibiting fraud and market manipulations in energy markets. To the extent Pogo's properties are shippers
on interstate pipelines, they must comply with the tariffs of those pipelines and with federal policies related to the use of interstate
capacity.
Pogo may be required to make
significant expenditures to comply with the governmental laws and regulations described above and may be subject to potential fines and
penalties if they are found to have violated these laws and regulations. Pogo believes the trend of more expansive and stricter environmental
legislation and regulations will continue. The laws and regulations that affect Pogo could increase the operating costs of Pogo and
delay production and may ultimately impact Pogo's ability and willingness to develop its properties.
Federal and state legislative and regulatory
initiatives relating to hydraulic fracturing could cause Pogo to incur increased costs, additional operating restrictions or delays and
have fewer potential development locations.
Pogo engages in hydraulic
fracturing. Hydraulic fracturing is a common practice that is used to stimulate production of hydrocarbons from tight formations, including
shales. The process involves the injection of water, sand and chemicals under pressure into formations to fracture the surrounding rock
and stimulate production. Currently, hydraulic fracturing is generally exempt from regulation under the Underground Injection Control
program of the U.S. Safe Drinking Water Act ("SDWA") and is typically regulated by state oil and gas commissions or similar
agencies.
However, several federal agencies
have asserted regulatory authority over certain aspects of the process. For example, in June 2016, the Environmental Protection Agency
(the "EPA") published an effluent limit guideline final rule prohibiting the discharge of wastewater from onshore unconventional
oil and gas extraction facilities to publicly owned wastewater treatment plants. Also, from time to time, legislation has been introduced,
but not enacted, in the U.S. Congress to provide for federal regulation of hydraulic fracturing and to require disclosure of the
chemicals used in the hydraulic fracturing process. This or other federal legislation related to hydraulic fracturing may be considered
again in the future, though Pogo cannot predict the extent of any such legislation at this time.
24
Moreover, some states and
local governments have adopted, and other governmental entities are considering adopting, regulations that could impose more stringent
permitting, disclosure and well-construction requirements on hydraulic fracturing operations, including states in which Pogo's
properties are located. For example, Texas, among others, has adopted regulations that impose new or more stringent permitting, disclosure,
disposal and well construction requirements on hydraulic fracturing operations. States could also elect to prohibit high volume hydraulic
fracturing altogether. In addition to state laws, local land use restrictions, such as city ordinances, may restrict drilling in general
and/or hydraulic fracturing in particular.
Increased regulation and attention
given to the hydraulic fracturing process, including the disposal of produced water gathered from drilling and production activities,
could lead to greater opposition to, and litigation concerning, crude oil and natural gas production activities using hydraulic fracturing
techniques in areas where Pogo owns properties. Additional legislation or regulation could also lead to operational delays or increased
operating costs for Pogo in the production of crude oil and natural gas, including from the development of shale plays, or could make
it more difficult for Pogo to perform hydraulic fracturing. The adoption of any federal, state or local laws or the implementation of
regulations regarding hydraulic fracturing could potentially cause a decrease in Pogo's completion of new crude oil and natural
gas wells and result in an associated decrease in the production attributable to Pogo's interests, which could have a material adverse
effect on Pogo's business, financial condition and results of operations.
Legislation or regulatory initiatives intended
to address seismic activity could restrict Pogo's development and production activities, as well as Pogo's ability to dispose
of produced water gathered from such activities, which could have a material adverse effect on their future business, which in turn could
have a material adverse effect on Pogo's business.
State and federal regulatory
agencies have recently focused on a possible connection between hydraulic fracturing related activities, particularly the underground
injection of wastewater into disposal wells, and the increased occurrence of seismic activity, and regulatory agencies at all levels are
continuing to study the possible linkage between oil and gas activity and induced seismicity. For example, in 2015, the United States
Geological Study ("USGS") identified eight states, including New Mexico, Oklahoma and Texas, with areas of increased rates
of induced seismicity that could be attributed to fluid injection or oil and gas extraction.
In addition, a number of lawsuits
have been filed alleging that disposal well operations have caused damage to neighboring properties or otherwise violated state and federal
rules regulating waste disposal. In response to these concerns, regulators in some states are seeking to impose additional requirements,
including requirements in the permitting of produced water disposal wells or otherwise to assess the relationship between seismicity and
the use of such wells. For example, the Texas Railroad Commission has previously published a rule governing permitting or re-permitting of
disposal wells that would require, among other things, the submission of information on seismic events occurring within a specified radius
of the disposal well location, as well as logs, geologic cross sections and structure maps relating to the disposal area in question.
If the permittee or an applicant of a disposal well permit fails to demonstrate that the produced water or other fluids are confined to
the disposal zone or if scientific data indicates such a disposal well is likely to be or determined to be contributing to seismic activity,
then the agency may deny, modify, suspend or terminate the permit application or existing operating permit for that well. The Texas Railroad
Commission has used this authority to deny permits for waste disposal wells. In some instances, regulators may also order that disposal
wells be shut in. In late 2021, the Texas Railroad Commission issued a notice to operators of disposal wells in the Midland area to reduce
saltwater disposal well actions and provide certain data to the commission. Separately, in November 2021, New Mexico implemented
protocols requiring operators to take various actions within a specified proximity of certain seismic activity, including a requirement
to limit injection rates if a seismic event is of a certain magnitude. As a result of these developments, Pogo may be required to curtail
operations or adjust development plans, which may adversely impact Pogo's business.
Pogo will likely dispose of
produced water volumes gathered from their production operations by injecting it into wells pursuant to permits issued by governmental
authorities overseeing such disposal activities. While these permits will be issued pursuant to existing laws and regulations, these legal
requirements are subject to change, which could result in the imposition of more stringent operating constraints or new monitoring and
reporting requirements, owing to, among other things, concerns of the public or governmental authorities regarding such gathering or disposal
activities. The adoption and implementation of any new laws or regulations that restrict Pogo's ability to use hydraulic fracturing
or dispose of produced water gathered from drilling and production activities by limiting volumes, disposal rates, disposal well locations
or otherwise, or requiring them to shut down disposal wells, could have a material adverse effect on Pogo's business, financial
condition and results of operations.
25
Restrictions on the ability of Pogo to obtain
water may have an adverse effect on Pogo's financial condition, results of operations and cash flows.
Water is an essential component
of crude oil and natural gas production during both the drilling and hydraulic fracturing processes. Over the past several years,
parts of the country, and in particular Texas, have experienced extreme drought conditions. As a result of this severe drought, some local
water districts have begun restricting the use of water subject to their jurisdiction for hydraulic fracturing to protect local water
supply. Such conditions may be exacerbated by climate change. If Pogo is unable to obtain water to use in their operations from local
sources, or if Pogo is unable to effectively utilize flowback water, they may be unable to economically drill for or produce crude oil
and natural gas from Pogo's properties, which could have an adverse effect on Pogo's financial condition, results of operations
and cash flows.
Pogo's operations are subject to a
series of risks arising from climate change.
Climate change continues to
attract considerable public and scientific attention. As a result, numerous proposals have been made and are likely to continue to be
made at the international, national, regional and state levels of government to monitor and limit emissions of carbon dioxide, methane
and other "greenhouse gases" ("GHGs"). These efforts have included consideration of cap-and-trade programs,
carbon taxes, GHG reporting and tracking programs and regulations that directly limit GHG emissions from certain sources.
In the United States,
no comprehensive climate change legislation has been implemented at the federal level. However, President Biden has highlighted addressing
climate change as a priority of his administration and has issued several Executive Orders addressing climate change. Moreover, following
the U.S. Supreme Court finding that GHG emissions constitute a pollutant under the Clean Air Act (the "CAA"), the EPA
has adopted regulations that, among other things, establish construction and operating permit reviews for GHG emissions from certain large
stationary sources, require the monitoring and annual reporting of GHG emissions from certain petroleum and natural gas system sources
in the United States, and together with the U.S. Department of Transportation (the "DOT"), implementing GHG emissions
limits on vehicles manufactured for operation in the United States. The regulation of methane from oil and gas facilities has been
subject to uncertainty in recent years. In September 2020, the Trump Administration revised prior regulations to rescind certain
methane standards and remove the transmission and storage segments from the source category for certain regulations. However, subsequently,
the U.S. Congress approved, and President Biden signed into law, a resolution under the Congressional Review Act to repeal the September 2020
revisions to the methane standards, effectively reinstating the prior standards. Additionally, in November 2021, the EPA issued a
proposed rule that, if finalized, would establish OOOO(b) new source and OOOO(c) first-time existing source standards of
performance for methane and volatile organic compound emissions for oil and gas facilities. Operators of affected facilities will have
to comply with specific standards of performance to include leak detection using optical gas imaging and subsequent repair requirement,
and reduction of emissions by 95% through capture and control systems. The EPA issued supplemental rules regarding methane emissions on
December 6, 2022. The IRA established the Methane Emissions Reduction Program, which imposes a charge on methane emissions from certain
petroleum and natural gas facilities, which may apply to our operations in the future and may require us to expend material sums. We cannot
predict the scope of any final methane regulatory requirements or the cost to comply with such requirements. Given the long-term trend
toward increasing regulation, future federal GHG regulations of the oil and gas industry remain a significant possibility.
26
Separately, various states
and groups of states have adopted or are considering adopting legislation, regulation or other regulatory initiatives that are focused
on such areas as GHG cap and trade programs, carbon taxes, reporting and tracking programs, and restriction of emissions. For example,
New Mexico has adopted regulations to restrict the venting or flaring of methane from both upstream and midstream operations. At the international
level, the United Nations-sponsored "Paris Agreement" requires member states to submit non-binding, individually-determined reduction
goals known as Nationally Determined Contributions every five years after 2020. President Biden has recommitted the United States
to the Paris Agreement and, in April 2021, announced a goal of reducing the United States' emissions by 50-52% below
2005 levels by 2030. Additionally, at the 26
th
Conference of the Parties to the United Nations
Framework Convention on Climate
Change ("COP26") in Glasgow in November 2021, the United States and the European Union jointly announced the launch
of a Global Methane Pledge, an initiative committing to a collective goal of reducing global methane emissions by at least 30% from 2020
levels by 2030, including "all feasible reductions" in the energy sector. The full impact of these actions cannot be predicted
at this time.
Governmental, scientific,
and public concern over the threat of climate change arising from GHG emissions has resulted in increasing political risks in the United States,
including climate change related pledges made by certain candidates now in public office. On January 27, 2021, President Biden issued
an Executive Order that calls for substantial action on climate change, including, among other things, the increased use of zero-emission vehicles
by the federal government, the elimination of subsidies provided to the fossil fuel industry, and increased emphasis on climate-related risks
across government agencies and economic sectors. The Biden Administration has also called for restrictions on leasing on federal land,
including the Department of the Interior's publication of a report recommending various changes to the federal leasing program,
though many such changes would require Congressional action. Substantially all of Pogo's interests are located on federal and state
lands, but Pogo cannot predict the full impact of these developments or whether the Biden Administration may pursue further restrictions.
Other actions that could be pursued by the Biden Administration may include the imposition of more restrictive requirements for the establishment
of pipeline infrastructure or the permitting of liquefied natural gas ("LNG") export facilities, as well as more restrictive
GHG emission limitations for oil and gas facilities. Litigation risks are also increasing as a number of entities have sought to bring
suit against various oil and natural gas companies in state or federal court, alleging among other things, that such companies created
public nuisances by producing fuels that contributed to climate change or alleging that the companies have been aware of the adverse effects
of climate change for some time but defrauded their investors or customers by failing to adequately disclose those impacts.
There are also increasing
financial risks for fossil fuel producers as shareholders currently invested in fossil-fuel energy companies may elect in the future
to shift some or all of their investments into non-fossil fuel related sectors. Institutional lenders who provide financing to fossil
fuel energy companies also have become more attentive to sustainable lending practices and some of them may elect not to provide funding
for fossil fuel energy companies. For example, at COP26, the Glasgow Financial Alliance for Net Zero ("GFANZ") announced that
commitments from over 450 firms across 45 countries had resulted in over $130 trillion in capital committed to net zero goals. The
various sub-alliances of GFANZ generally require participants to set short-term, sector-specific targets to transition their
financing, investing, and/or underwriting activities to net zero emissions by 2050. There is also a risk that financial institutions will
be required to adopt policies that have the effect of reducing the funding provided to the fossil fuel sector. In late 2020, the Federal
Reserve announced that is has joined the Network for Greening the Financial System, a consortium of financial regulators focused on addressing
climate-related risks in the financial sector. Subsequently, in November 2021, the Federal Reserve issued a statement in support
of the efforts of the Network for Greening the Financial System to identify key issues and potential solutions for the climate-related challenges
most relevant to central banks and supervisory authorities. Limitation of investments in and financing for fossil fuel energy companies
could result in the restriction, delay or cancellation of drilling programs or development or production activities. Additionally, the
SEC announced its intention to promulgate rules requiring climate disclosures. Although the form and substance of these requirements is
not yet known, this may result in additional costs to comply with any such disclosure requirements.
The adoption and implementation
of new or more stringent international, federal or state legislation, regulations or other regulatory initiatives that impose more stringent
standards for GHG emissions from the oil and natural gas sector or otherwise restrict the areas in which this sector may produce oil and
natural gas or generate the GHG emissions could result in increased costs of compliance or costs of consuming, and thereby reduce demand
for oil and natural gas, which could reduce the profitability of Pogo's interests. Additionally, political, litigation and financial
risks may result in Pogo restricting or cancelling production activities, incurring liability for infrastructure damages as a result of
climatic changes, or impairing their ability to continue to operate in an economic manner, which also could reduce the profitability of
its interests. One or more of these developments could have a material adverse effect on Pogo's business, financial condition and
results of operation.
27
Climate change may also result
in various physical risks, such as the increased frequency or intensity of extreme weather events or changes in meteorological and hydrological
patterns, that could adversely impact our operations, as well as those of our operators and their supply chains. Such physical risks may
result in damage to operators' facilities or otherwise adversely impact their operations, such as if they become subject to water
use curtailments in response to drought, or demand for their products, such as to the extent warmer winters reduce the demand for energy
for heating purposes.
Increased attention to ESG matters and conservation
measures may adversely impact Pogo's business.
Increasing attention to climate
change, societal expectations on companies to address climate change, investor and societal expectations regarding voluntary ESG disclosures
and consumer demand for alternative forms of energy may result in increased costs, reduced demand for Pogo's products, reduced profits,
and increased investigations and litigation. Increasing attention to climate change and environmental conservation, for example, may result
in demand shifts for oil and natural gas products and additional governmental investigations and private litigation against Pogo. Additionally,
the SEC proposed rules on climate change disclosure requirements for public companies which, if adopted as proposed, could result in substantial
compliance costs. To the extent that societal pressures or political or other factors are involved, it is possible that such liability
could be imposed without regard to Pogo's causation of, or contribution to, the asserted damage, or to other mitigating factors.
Moreover, while Pogo may create
and publish voluntary disclosures regarding ESG matters from time to time, many of the statements in those voluntary disclosures are based
on hypothetical expectations and assumptions that may or may not be representative of current or actual risks or events or forecasts of
expected risks or events, including the costs associated therewith. Such expectations and assumptions are necessarily uncertain and may
be prone to error or subject to misinterpretation given the long timelines involved and the lack of an established single approach to
identifying, measuring and reporting on many ESG matters.
In addition, organizations
that provide information to investors on corporate governance and related matters have developed ratings processes for evaluating companies
on their approach to ESG matters. Such ratings are used by some investors to inform their investment and voting decisions. Unfavorable
ESG ratings and recent activism directed at shifting funding away from companies with energy-related assets could lead to increased
negative investor sentiment toward Pogo and its industry and to the diversion of investment to other industries, which could have a negative
impact on Pogo's access to and costs of capital. Also, institutional lenders may decide not to provide funding for fossil fuel energy
companies based on climate change related concerns, which could affect Pogo's access to capital for potential growth projects.
Pogo's results of operations may be
materially impacted by efforts to transition to a lower-carbon economy.
Concerns over the risk of
climate change have increased the focus by global, regional, national, state and local regulators on GHG emissions, including carbon dioxide
emissions, and on transitioning to a lower-carbon future. A number of countries and states have adopted, or are considering the adoption
of, regulatory frameworks to reduce greenhouse gas emissions. These regulatory measures may include, among others, adoption of cap and
trade regimes, carbon taxes, increased efficiency standards, prohibitions on the sales of new automobiles with internal combustion engines,
and incentives or mandates for battery-powered automobiles and/or wind, solar or other forms of alternative energy. Compliance with
changes in laws, regulations and obligations relating to climate change could result in increased costs of compliance for Pogo or costs
of consuming crude oil and natural gas for such products, and thereby reduce demand, which could reduce the profitability of Pogo. For
example, Pogo may be required to install new emission controls, acquire allowances or pay taxes related to their greenhouse gas emissions,
or otherwise incur costs to administer and manage a GHG emissions program. Additionally, Pogo could incur reputational risk tied to changing
customer or community perceptions of its, customers contribution to, or detraction from, the transition to a lower-carbon economy.
These changing perceptions could lower demand for oil and gas products, resulting in lower prices and lower revenues as consumers avoid
carbon-intensive industries, and could also pressure banks and investment managers to shift investments and reduce lending.
Separately, banks and other
financial institutions, including investors, may decide to adopt policies that restrict or prohibit investment in, or otherwise funding,
Pogo based on climate change-related concerns, which could affect its or Pogo's access to capital for potential growth projects.
Approaches to climate change
and transition to a lower-carbon economy, including government regulation, company policies, and consumer behavior, are continuously
evolving. At this time, Pogo cannot predict how such approaches may develop or otherwise reasonably or reliably estimate their impact
on its or its operators' financial condition, results of operations and ability to compete. However, any long-term material
adverse effect on the oil and gas industry may adversely affect Pogo's financial condition, results of operations and cash flows.
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Additional restrictions on development activities
intended to protect certain species of wildlife may adversely affect Pogo's ability to conduct development activities.
In the United States,
the Endangered Species Act (the "ESA") restricts activities that may affect endangered or threatened species or their habitats.
Similar protections are offered to migratory birds under the Migratory Bird Treaty Act (the "MBTA"). To the extent species
that are listed under the ESA or similar state laws, or are protected under the MBTA, live in the areas where Pogo operates, Pogo's
ability to conduct or expand operations could be limited, or Pogo could be forced to incur additional material costs. Moreover, Pogo's
development drilling activities may be delayed, restricted or precluded in protected habitat areas or during certain seasons, such as
breeding and nesting seasons. For example, in June 2021, the U.S. Fish & Wildlife Service (the "FWS") proposed
to list two distinct population sections ("DPS") of the Lesser Prairie Chicken, including one in portions of the Permian Basin,
under the ESA (the "southern DPS"). On November 25, 2022, the FWS finalized the proposed rule, listing the southern DPS
of the Lesser Prairie-Chicken as endangered and the northern DPS of the Lesser Prairie-Chicken as threatened.
Recently, there have also
been renewed calls to review protections currently in place for the dunes sagebrush lizard, whose habitat includes parts of the Permian
Basin, and to reconsider listing the species under the ESA.
In addition, as a result of
one or more settlements approved by the FWS, the agency was required to make a determination on the listing of numerous other species
as endangered or threatened under the ESA by the end of the FWS' 2017 fiscal year. The FWS did not meet that deadline, but continues
to evaluate whether to take action with respect to those species. The designation of previously unidentified endangered or threatened
species could cause Pogo's operations to become subject to operating restrictions or bans, and limit future development activity
in affected areas. The FWS and similar state agencies may designate critical or suitable habitat areas that they believe are necessary
for the survival of threatened or endangered species. Such a designation could materially restrict use of or access to federal, state
and private lands.
Risks Related to Our Financial and Debt Arrangements
Restrictions in our current and future debt
agreements and credit facilities could limit our growth and our ability to engage in certain activities.
Our current Term Loan (as
defined herein) contains certain customary representations and warranties and various covenants and restrictive provisions that limit
our ability to, among other things:
●
incur or guarantee additional debt;
●
enter into certain hedging contracts;
●
pay dividends on, or redeem or repurchase, their equity interests, return capital to the holders of their equity interests, or make other distributions to holders of their equity interests;
●
amend our organizational documents or certain material contracts;
●
make certain investments and acquisitions;
●
incur certain liens or permit them to exist;
29
●
enter into certain types of transactions with affiliates;
●
merge or consolidate with another company;
●
transfer, sell or otherwise dispose of assets;
●
enter into certain other lines of business;
●
repay or redeem certain debt;
●
use the proceeds from the Term Loan for certain purposes;
●
allow certain gas imbalances, take-or-pay, or other prepayments;
A failure to comply with the
provisions of the Term Loan could result in an event of default, which could enable the Lender to declare, subject to the terms and conditions
of the Term Loan, any outstanding principal of that debt, together with accrued and unpaid interest, to be immediately due and payable.
If the payment of the debt is accelerated, cash flows from our operations may be insufficient to repay such debt in full. The Term Loan
contains events of default customary for transactions of this nature, including the occurrence of a change of control.
If we are unable to comply with the restrictions
and covenants in our debt agreements, there could be an event of default under the terms of such agreements, which could result in an
acceleration of repayment.
If we are unable to comply
with the restrictions and covenants in the Term Loan Agreement, the Seller Note or any future debt agreement or if we default under the
terms of the Term Loan Agreement, the Seller Note or any future debt agreement, there could be an event of default. Our ability to comply
with these restrictions and covenants, including meeting any financial ratios and tests, may be affected by events beyond our control.
We cannot assure that we will be able to comply with these restrictions and covenants or meet such financial ratios and tests. In the
event of a default under the Term Loan Agreement, the Seller Note or any future debt agreement, the lenders could terminate accelerate
the loans and declare all amounts borrowed due and payable. If any of these events occur, our assets might not be sufficient to repay
in full all of our outstanding indebtedness and we may be unable to find alternative financing. Even if we could obtain alternative financing,
it might not be on terms that are favorable or acceptable to us. Additionally, we may not be able to amend the Term Loan Agreement, the
Seller Note or any future debt agreement or obtain needed waivers on satisfactory terms. There can be no assurance that, if needed to
avoid noncompliance with our debt agreements in the future, we will obtain the necessary waivers from the applicable lenders on satisfactory
terms or at all. As a result, there could be an event of default under such agreements, which could result in an acceleration of repayment.
Our debt levels may limit our flexibility
to obtain additional financing and pursue other business opportunities.
Our existing and any future
indebtedness could have important consequences to it, including:
●
our ability to obtain additional financing, if necessary, for working capital, capital expenditures, acquisitions or other purposes may be impaired, or such financing may not be available on terms acceptable to it;
●
covenants in the Term Loan require, and in any future credit and debt arrangement may require, us to meet financial tests that may affect our flexibility in planning for and reacting to changes in its business, including possible acquisition opportunities;
●
our access to the capital markets may be limited;
30
●
our borrowing costs may increase;
●
we will use a portion of its discretionary cash flows to make principal and interest payments on its indebtedness, reducing the funds that would otherwise be available for operations, future business opportunities and payment of dividends to its stockholders; and
●
our debt level will make us more vulnerable than competitors with less debt to competitive pressures or a downturn in its business or the economy generally.
Our ability to service our
indebtedness will depend upon, among other things, our future financial and operating performance, which will be affected by prevailing
economic conditions and financial, business, regulatory and other factors, some of which are beyond its control. If our operating results
are not sufficient to service its current or future indebtedness, we will be forced to take actions such as reducing distributions, reducing
or delaying business activities, acquisitions, investments and/or capital expenditures, selling assets, restructuring or refinancing its
indebtedness, or seeking additional equity capital or bankruptcy protection. We may not be able to effect any of these remedies on satisfactory
terms or at all.
Our borrowings under the Term Loan Agreement
expose us to interest rate risk.
Our results of operations
are exposed to interest rate risk associated with borrowings under the Term Loan Agreement, which bears interest at rates based on the
Secured Overnight Financing Rate ("SOFR") or an alternative floating interest rate benchmark. In response to inflation, the
U.S. Federal Reserve increased interest rates multiple times in 2022 and 2023 and signaled that additional interest rate increases should
be expected in 2024. Raising or lowering of interest rates by the U.S. Federal Reserve generally causes an increase or decrease, respectively,
in SOFR and other floating interest rate benchmarks. As such, if interest rates increase, so will our interest costs. If interest rates
continue to increase, it may have a material adverse effect on our results of operations and financial condition.
Risks Related to Our Common Stock and this Offering
Our stock price may be volatile, which could result in substantial
losses to investors and litigation.
In addition to changes to
market prices based on our results of operations and the factors discussed elsewhere in this "Risk Factors" section, the market
price of and trading volume for our Class A Common Stock may change for a variety of other reasons, not necessarily related to our actual
operating performance. The capital markets have experienced extreme volatility that has often been unrelated to the operating performance
of particular companies. These broad market fluctuations may adversely affect the trading price of our Class A Common Stock. In addition,
the average daily trading volume of the securities of small companies can be very low, which may contribute to future volatility. Factors
that could cause the market price of our Class A Common Stock to fluctuate significantly include:
●
the results of operating and financial performance and prospects of other companies in our industry;
●
strategic actions by us or our competitors, such as acquisitions or restructurings;
●
announcements of innovations, increased service capabilities, new or terminated customers or new, amended or terminated contracts by our competitors;
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the public's reaction to our press releases, other public announcements, and filings with the Securities and Exchange Commission;
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lack of securities analyst coverage or speculation in the press or investment community about us or market opportunities in the telecommunications services and staffing industry;
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changes in government policies in the United States and, as our international business increases, in other foreign countries;
●
changes in earnings estimates or recommendations by securities or research analysts who track our Class A Common Stock or failure of our actual results of operations to meet those expectations;
●
market and industry perception of our success, or lack thereof, in pursuing our growth strategy;
●
changes in accounting standards, policies, guidance, interpretations or principles;
●
any lawsuit involving us, our services or our products;
●
arrival and departure of key personnel;
●
sales of Class A Common Stock by us, our investors or members of our management team; and
●
changes in general market, economic and political conditions in the United States and global economies or financial markets, including those resulting from natural or man-made disasters.
Any of these factors, as well
as broader market and industry factors, may result in large and sudden changes in the trading volume of our Class A Common Stock and could
seriously harm the market price of our Class A Common Stock, regardless of our operating performance. This may prevent you from being
able to sell your shares at or above the price you paid for your shares of our Class A Common Stock, if at all. In addition, following
periods of volatility in the market price of a company's securities, stockholders often institute securities class action litigation
against that company. Our involvement in any class action suit or other legal proceeding could divert our senior management's attention
and could adversely affect our business, financial condition, results of operations and prospects.
The sale or availability for sale of substantial
amounts of our Class A Common Stock could adversely affect the market price of our Class A Common Stock.
Sales of substantial amounts
of shares of our Class A Common Stock, or the perception that these sales could occur, could adversely affect the market price of our
Class A Common Stock and could impair our future ability to raise capital through common stock offerings.
We have never paid cash dividends on our
Class A Common Stock and do not anticipate paying any cash dividends on our Class A Common Stock.
We have never paid cash dividends
and do not anticipate paying any cash dividends on our Class A Common Stock in the foreseeable future. We currently intend to retain any
earnings to finance our operations and growth. As a result, any short-term return on your investment will depend on the market price of
our Class A Common Stock, and only appreciation of the price of our Class A Common Stock, which may never occur, will provide a return
to stockholders. The decision whether to pay dividends will be made by our board of directors in light of conditions then existing, including,
but not limited to, factors such as our financial condition, results of operations, capital requirements, business conditions, and covenants
under any applicable contractual arrangements. Investors seeking cash dividends should not invest in our Class A Common Stock.
If equity research analysts do not publish
research or reports about our business, or if they issue unfavorable commentary or downgrade our Class A Common Stock, the market price
of our Class A Common Stock will likely decline.
The trading market for our
Class A Common Stock will rely in part on the research and reports that equity research analysts, over whom we have no control, publish
about us and our business. We may never obtain research coverage by securities and industry analysts. If no securities or industry analysts
commence coverage of our company, the market price for our Class A Common Stock could decline. In the event we obtain securities or industry
analyst coverage, the market price of our Class A Common Stock could decline if one or more equity analysts downgrade our Class A Common
Stock or if those analysts issue unfavorable commentary, even if it is inaccurate, or cease publishing reports about us or our business.
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The NYSE American may delist our securities
from trading on its exchange, which could limit investors' ability to make transactions in our securities and subject us to additional
trading restrictions.
We have listed our Class A
Common Stock and Public Warrants on the NYSE American. Although we have met the minimum initial listing standards set forth in the NYSE
American rules, we cannot assure you that our securities will be, or will continue to be, listed on the NYSE American in the future. In
order to continue listing our securities on the NYSE American, we must maintain certain financial, distribution and stock price levels.
Generally, we must maintain a minimum amount in stockholders' equity (generally $2,500,000) and a minimum number of holders of our
securities (generally 300 public holders).
On April 17, 2024, we received
a notice from the NYSE American that we were not in compliance with NYSE American listing standards as a result of our failure to timely
file our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 with the SEC. On May 3, 2024, we filed our Annual Report
on Form 10-K for the fiscal year ended December 31, 2023, and regained compliance with NYSE American rules. Although we believe that the
failure to timely file our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 was primarily as a result of the additional
time needed to account for the Purchase and we expect to file our required subsequent reports in a timely fashion, there can be no assurance
that we will be able to timely file required reports or meet other continued listing requirements in the future. However, in determining
whether to afford a company a cure period prior to commencing suspension or delisting procedures, the NYSE American analyzes all relevant
facts including any past history of late filings, and thus the late filing of our Annual Report on Form 10-K for the fiscal year ended
December 31, 2023 could be used as a factor by the NYSE American in any future decision to delist our securities from trading on its exchange.
If the NYSE American delists
our securities from trading on its exchange and we are not able to list our securities on another national securities exchange, we expect
our securities could be quoted on an over-the-counter market. If this were to occur, we could face significant material adverse consequences,
including:
●
a limited availability of market quotations for our securities;
●
reduced liquidity for our securities;
●
a determination that our Class A Common Stock is a "penny stock" which will require brokers trading in our Class A Common Stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities;
●
a limited amount of news and analyst coverage; and
●
a decreased ability to issue additional securities or obtain additional financing in the future.
As a result of our prior status as a special
purpose acquisition company ("SPAC"), regulatory obligations may impact us differently than other publicly traded companies.
We became a publicly traded
company by completing the Purchase as a special purpose acquisition company (a "SPAC"). As a result of the Purchase, and the
transactions contemplated thereby, our regulatory obligations have, and may continue to impact us differently than other publicly traded
companies. For instance, the SEC and other regulatory agencies may issue additional guidance or apply further regulatory scrutiny to companies
like us that have completed a business combination with a SPAC. Managing this regulatory environment, which has and may continue to evolve,
could divert management's attention from the operation of our business, negatively impact our ability to raise capital when needed,
or have an adverse effect on the price of our Class A Common Stock.
We may redeem your Public Warrants prior
to their exercise at a time that is disadvantageous to you, thereby making such warrants worthless.
We may redeem your Public
Warrants prior to their exercise at a time that is disadvantageous to you, thereby making such warrants worthless. We have the ability
to redeem outstanding Public Warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per
warrant, provided that the closing price of the shares of the Class A Common Stock equals or exceeds $18.00 per share (as adjusted for
share subdivisions, share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within a 30 trading
day period ending on the third trading day prior to the date on which a notice of redemption is sent to the warrantholders. Please
note that the closing price of our Class A Common Stock has not exceeded $18.00 per share for any of the 30 trading days prior to the
date of this prospectus. We will not redeem the warrants as described above unless a registration statement under the Securities Act covering
the shares of the Class A Common Stock issuable upon exercise of such warrants is effective and a current prospectus relating to shares
of the Class A Common Stock is available throughout the 30-day redemption period. If and when the Public Warrants become redeemable
by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all
applicable state securities laws. Redemption of the outstanding Public Warrants could force you (i) to exercise your Public Warrants
and pay the exercise price therefor at a time when it may be disadvantageous for you to do so, (ii) to sell your Public Warrants
at the then-current market price when you might otherwise wish to hold your Public Warrants, or (iii) to accept the nominal
redemption price which, at the time the outstanding Public Warrants are called for redemption, is likely to be substantially less than
the market value of your Public Warrants.
33
The value received upon exercise
of the Public Warrants (1) may be less than the value the holders would have received if they had exercised their Public Warrants
at a later time where the underlying share price is higher and (2) may not compensate the holders for the value of the Public Warrants.
The fair value of the Public Warrants that may be retained by redeeming shareholders is $1.1 million based on recent trading prices,
and 8,625,000 Public Warrants held by public shareholders.
We may amend the terms of the Public Warrants
in a manner that may be adverse to holders of Public Warrants with the approval by the holders of at least 50% of the then-outstanding Public
Warrants. As a result, the exercise price of the warrants could be increased, the exercise period could be shortened and the number of
shares of our Class A Common Stock purchasable upon exercise of a warrant could be decreased, all without a holder's approval.
Our Public Warrants were issued
in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us. The
warrant agreement provides that the terms of the warrants may be amended without the consent of any holder (i) to cure any ambiguity
or to correct any mistake, including to conform the provisions therein to the descriptions of the terms of the warrants, or to cure, correct
or supplement any defective provision, or (ii) to add or change any other provisions with respect to matters or questions arising
under the warrant agreement as the parties to the warrant agreement may deem necessary or desirable and that the parties deem to not adversely
affect the interests of the registered holders of the warrants. The warrant agreement requires the approval by the holders of at least
50% of the then-outstanding Public Warrants to make any change that adversely affects the interests of the registered holders of
Public Warrants. Accordingly, we may amend the terms of the Public Warrants in a manner adverse to a holder if holders of at least 50%
of the then-outstanding Public Warrants approve of such amendment. Although our ability to amend the terms of the Public Warrants
with the consent of at least 50% of the then-outstanding Public Warrants is unlimited, examples of such amendments could be amendments
to, among other things, increase the exercise price of the warrants, convert the warrants into cash or stock (at a ratio different than
initially provided), shorten the exercise period or decrease the number of shares of our Class A Common Stock purchasable upon exercise
of a warrant.
Purchases made pursuant to the Common Stock
Purchase Agreement will be made at a discount to the volume weighted average price of Class A Common Stock, which may result in negative
pressure on the stock price following the Closing of the Purchase.
On October 17, 2022, we entered
into a Common Stock Purchase Agreement (the "Common Stock Purchase Agreement) and a related registration rights agreement (the "White
Lion RRA") with White Lion Capital, LLC ("White Lion"). Pursuant to the Common Stock Purchase Agreement, we have the
right, but not the obligation to require White Lion to purchase, from time to time, up to $150,000,000 in aggregate gross purchase price
of newly issued shares of Class A Common Stock, subject to certain limitations and conditions set forth in the Common Stock Purchase Agreement.
We are obligated under the
Common Stock Purchase Agreement and the White Lion RRA to file a registration statement with the SEC to register the Class A Common Stock
under the Securities Act of 1933, as amended, for the resale by White Lion of shares of Class A Common Stock that we may issue
to White Lion under the Common Stock Purchase Agreement. We filed a registration statement on Form S-1 (File No. 333-275378) that became
effective on August 9, 2024, which registered for resale up to 5,000,000 shares of Class A Common Stock that may be sold to White Lion
from time to time (the "Prior Registration Statement"). We have sold approximately $4.9 million in shares of our Class A Common
Stock pursuant to the Purchase Agreement, and we may receive proceeds of up to approximately $145.1 million remaining under the facility
from the sale of the shares of Class A Common Stock to White Lion under the Common Stock Purchase Agreement. White Lion has resold 4,350,000
shares registered on the Prior Registration Statement, with 650,000 shares remaining registered but unissued and not resold. Therefore,
we have filed the registration statement that includes this prospectus with the SEC to register under the Securities Act the resale by
White Lion of additional shares of Class A Common Stock that we may issue to White Lion under the Common Stock Purchase Agreement.
The purchase price to be paid
by White Lion for any such shares will equal 96% of the lowest daily volume-weighted average price of Class A Common Stock during
a period of two consecutive trading days following the applicable Notice Date.
Such purchases will dilute
our stockholders and could adversely affect the prevailing market price of our Class A Common Stock and impair our ability to raise capital
through future offerings of equity or equity-linked securities, although we intend to carefully control such purchases as to minimize
the impact. Accordingly, the adverse market and price pressures resulting from the purchase and registration of Class A Common Stock pursuant
to the Common Stock Purchase Agreement may continue for an extended period of time and continued negative pressure on the market price
of our Class A Common Stock could have a material adverse effect on our ability to raise additional equity capital.
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It is not possible to predict the actual
number of shares of Class A Common Stock, if any, we will sell under the Common Stock Purchase Agreement to White Lion or the actual gross
proceeds resulting from those sales.
We generally have the right
to control the timing and amount of any sales of the Class A Common Stock to White under the Common Stock Purchase Agreement. Sales of
Class A Common Stock, if any, to White Lion under the Common Stock Purchase Agreement will depend upon market conditions and other factors
to be determined by us. We may ultimately decide to sell to White Lion all, some or none of the Class A Common Stock that may be available
for us to sell to White Lion pursuant to the Common Stock Purchase Agreement.
Because the purchase price
per share of Class A Common Stock to be paid by White Lion will fluctuate based on the market prices of the Class A Common Stock at the
time we elect to sell Class A Common Stock to White Lion pursuant to the Common Stock Purchase Agreement, if any, it is not possible for
us to predict, as of the date of this prospectus and prior to any such sales, the number of shares of Class A Common Stock that we will
sell to White Lion under the Common Stock Purchase Agreement, the purchase price per share that White Lion will pay for Class A Common
Stock purchased from us under the Common Stock Purchase Agreement, or the aggregate gross proceeds that we will receive from those purchases
by White Lion under the Common Stock Purchase Agreement.
The number of shares of Class
A Common Stock ultimately offered for sale by White Lion is dependent upon the number of shares of Class A Common Stock, if any, we ultimately
elect to sell to White Lion under the Common Stock Purchase Agreement. However, even if we elect to sell Class A Common Stock to White
Lion pursuant to the Common Stock Purchase Agreement, White Lion may resell all, some or none of such shares at any time or from time
to time in its sole discretion and at different prices.
Because the purchase price
per share to be paid by White Lion for the shares of Class A Common Stock that we may elect to sell to White Lion under the Common Stock
Purchase Agreement, if any, will fluctuate based on the market prices of our Class A Common Stock for each purchase made pursuant to the
Common Stock, if any, it is not possible for us to predict, as of the date of this prospectus and prior to any such sales, the number
of shares of Class A Common Stock that we will sell to White Lion under the Common Stock Purchase Agreement, the purchase price per share
that While Lion will pay for shares purchased from us under the Common Stock Purchase Agreement, or the aggregate gross proceeds that
we will receive from those purchases by White Lion under the Purchase Agreement, if any.
Moreover, although the Common
Stock Purchase Agreement provides that we may sell up to an aggregate of $150,000,000 of our Class A Common Stock to White Lion (of which
proceeds of approximately $4.9 million from the issuance and sale of 4,350,000 shares have been previously received by the Company, with
approximately $145.1 million in available proceeds remaining under the Common Stock Purchase Agreement), we initially registered only
5,000,000 shares of our Class A Common Stock in the Prior Registration Statement and we are registering only an additional 5,000,000 ELOC
Shares hereby. If we elect to sell to White Lion all of the ELOC Shares registered for resale (including the shares registered under the
Prior Registration Statement), depending on the market prices of our Class A Common Stock for each purchase made pursuant to the Common
Stock Purchase Agreement, the actual gross proceeds from the sale of the shares may be substantially less than the $150,000,000 total
commitment available to us under the Common Stock Purchase Agreement. If it becomes necessary for us to issue and sell to White Lion under
the Common Stock Purchase Agreement more shares than the ELOC Shares being registered for resale under this prospectus in order to receive
aggregate gross proceeds equal to $150,000,000 under the Common Stock Purchase Agreement, we must file with the SEC additional registration
statements to register under the Securities Act the resale by White Lion of any such additional shares of our Class A Common Stock over
the ELOC Shares registered in this Registration Statement that we wish to sell from time to time under the Common Stock Purchase Agreement,
which the SEC must declare effective, in each case before we may elect to sell any additional shares of our Class A Common Stock to White
Lion under the Common Stock Purchase Agreement.
Any issuance and sale by us
under the Common Stock Purchase Agreement of a substantial amount of shares of Class A Common Stock in addition to the ELOC Shares being
registered for resale by White Lion under this prospectus could cause additional substantial dilution to our stockholders. The number
of shares of our Class A Common Stock ultimately offered for sale by White Lion is dependent upon the number of shares of Class A Common
Stock, if any, we ultimately sell to White Lion under the Common Stock Purchase Agreement.
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The sale and issuance of Class A Common
Stock to White Lion will cause dilution to our existing securityholders, and the resale of the Class A Common Stock acquired by White
Lion, or the perception that such resales may occur, could cause the price of our Class A Common Stock to decrease.
The purchase price per share
of Class A Common Stock to be paid by White Lion for additional shares of Class A Common Stock that we may elect to sell to White Lion
under the Common Stock Purchase Agreement, if any, will fluctuate based on the market prices of our Class A Common Stock at the time we
elect to sell Class A Common Stock to White Lion pursuant to the Common Stock Purchase Agreement. Depending on market liquidity at the
time, resales of such Class A Common Stock by White Lion may cause the trading price of our Class A Common Stock to decrease.
If and when we elect to sell
additional shares of Class A Common Stock to White Lion registered hereunder, sales of newly issued Class A Common Stock by us to White
Lion could result in substantial dilution to the interests of existing holders of our Class A Common Stock. Additionally, the sale of
a substantial number of Class A Common Stock to White Lion, or the anticipation of such sales, could make it more difficult for us to
sell equity or equity-related securities in the future at a time and at a price that we might otherwise wish to effect sales.
We expect to grant equity
awards to employees and directors under our equity incentive plans. We may also raise capital through equity financings in the future.
As part of our business strategy, we may make or receive investments in companies, solutions or technologies and issue equity securities
to pay for any such acquisition or investment. Any such issuances of additional share capital may cause shareholders to experience significant
dilution of their ownership interests and the per share value of our Class A Common Stock to decline.
Investors who buy shares at different times
will likely pay different prices.
Pursuant to the Common Stock
Purchase Agreement, we will have discretion, subject to market demand, to vary the timing, prices, and numbers of shares sold to White
Lion. If and when we do elect to sell additional shares of our Class A Common Stock to White Lion pursuant to the Common Stock Purchase
Agreement, after White Lion has acquired such shares, White Lion may resell all, some or none of such shares at any time or from time
to time in its discretion and at different prices. As a result, investors who purchase shares from White Lion in this offering at different
times will likely pay different prices for those shares, and so may experience different levels of dilution and in some cases substantial
dilution and different outcomes in their investment results. Investors may experience a decline in the value of the shares they purchase
from White Lion in this offering as a result of future sales made by us to White Lion at prices lower than the prices such investors paid
for their shares in this offering.
Management will have broad discretion as
to the use of the proceeds from the sale of shares to White Lion, and uses may not improve our financial condition or market value.
Because we have not designated
the amount of net proceeds from the sale of shares of our Class A Common Stock to be used for any particular purpose, our management will
have broad discretion as to the application of such net proceeds and could use them for purposes other than those contemplated hereby.
Our management may use the net proceeds for corporate purposes that may not improve our financial condition or market value.
The JOBS Act permits "emerging growth
companies" like us to take advantage of certain exemptions from various reporting requirements applicable to other public companies
that are not emerging growth companies.
We qualify as an "emerging
growth company" as defined in Section 2(a)(19) of the Securities Act, as modified by the JOBS Act. As such, we take advantage
of certain exemptions from various reporting requirements applicable to other public companies that are not emerging growth companies,
including (a) the exemption from the auditor attestation requirements with respect to internal control over financial reporting under
Section 404 of the Sarbanes-Oxley Act, (b) the exemptions from say-on-pay, say-on-frequency and say-on-golden parachute
voting requirements and (c) reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements.
As a result, our stockholders may not have access to certain information they deem important. We will remain an emerging growth company
until the earliest of (a) the last day of the fiscal year (i) following February 10, 2027, the fifth anniversary of
our IPO, (ii) in which we have total annual gross revenue of at least $1.235 billion (as adjusted for inflation pursuant to
SEC rules from time to time) or (iii) in which we are deemed to be a large accelerated filer, which means the market value of our
Class A Common Stock that is held by non-affiliates exceeds $700 million as of the last business day of our prior second
fiscal quarter, and (b) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior
three year period.
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In addition, Section 107
of the JOBS Act provides that an emerging growth company can take advantage of the exemption from complying with new or revised accounting
standards provided in Section 7(a)(2)(B) of the Securities Act as long as we are an emerging growth company. An emerging growth
company can therefore delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.
The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply
to non-emerging growth companies, but any such election to opt out is irrevocable. We have elected to irrevocably opt out of such
extended transition period, which means that when a standard is issued or revised and it has different application dates for public or
private companies, we will adopt the new or revised standard at the time public companies adopt the new or revised standard. This may
make comparison of our financial statements with another emerging growth company that has not opted out of using the extended transition
period difficult or impossible because of the potential differences in accounting standards used.
We cannot predict if investors
will find our Class A Common Stock less attractive because we will rely on these exemptions. If some investors find our Class A Common
Stock less attractive as a result, there may be less active trading market for our Class A Common Stock and our stock price may be more
volatile.
The Second A&R Charter designates state
courts within the State of Delaware as the exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders,
which could limit stockholders' ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees
or agents.
The Second A&R Charter
provides that, unless we consent in writing to the selection of an alternative forum, (a) the Court of Chancery of the State of Delaware
shall, to the fullest extent permitted by law, be the sole and exclusive forum for (i) any derivative action or proceeding brought
on behalf of the company, (ii) any action asserting a claim of breach of a fiduciary duty owed by, or other wrongdoing by, any current
or former director, officer, employee or agent of the company to us or our stockholders, or a claim of aiding and abetting any such breach
of fiduciary duty, (iii) any action asserting a claim against us or any of our directors, officers, employees or agents arising pursuant
to any provision of the DGCL, the Second A&R Charter (as may be amended, restated, modified, supplemented or waived from time to time),
(iv) any action to interpret, apply, enforce or determine the validity of the Second A&R Charter (as may be amended, restated,
modified, supplemented or waived from time to time), (v) any action asserting a claim against us or any of our directors, officers,
employees or agents that is governed by the internal affairs doctrine or (vi) any action asserting an "internal corporate claim"
as that term is defined in Section 115 of the DGCL.
In addition, the Second A&R
Charter provides that, unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States
of America shall, to the fullest extent permitted by law, be the sole and exclusive forum for the resolution of any complaint asserting
a cause of action arising under the Securities Act and the rules and regulations promulgated thereunder. Notwithstanding the foregoing,
the Second A&R Charter provides that the exclusive forum provision will not apply to claims seeking to enforce any liability or duty
created by the Exchange Act or any other claim for which the U.S. federal courts have exclusive jurisdiction.
This choice of forum provision
may limit a stockholder's ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our
directors, officers, other employees or stockholders, which may discourage lawsuits with respect to such claims, although our stockholders
will not be deemed to have waived our compliance with federal securities laws and the rules and regulations thereunder. Alternatively,
if a court were to find the choice of forum provision contained in our amended and restated bylaws to be inapplicable or unenforceable
in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business,
operating results and financial condition.
37
The Second A&R Charter contains a waiver
of the corporate opportunities doctrine for our directors and officers, and therefore such persons have no obligations to make opportunities
available to us.
The "corporate opportunities"
doctrine provides that directors and officers of a corporation, as part of their duty of loyalty to the corporation and its shareholders,
generally have a fiduciary duty to disclose opportunities to the corporation that are related to its business and are prohibited from
pursuing those opportunities unless the corporation determines that it is not going to pursue them. Our amended and restated certificate
of incorporation waives the corporate opportunities doctrine. It states that, to the extent allowed by law, the doctrine of corporate
opportunity, or any other analogous doctrine, shall not apply with respect to us or any of our officers or directors or any of their respective
affiliates, in circumstances where the application of any such doctrine would conflict with any fiduciary duties or contractual obligations
they may have as of the date of the amended and restated certificate of incorporation or in the future, and we renounce any expectancy
that any of pir directors or officers will offer any such corporate opportunity of which he or she may become aware to us, except, the
doctrine of corporate opportunity shall apply with respect to any of our directors or officers with respect to a corporate opportunity
that was offered to such person solely in his or her capacity as a director or officer of the company and (i) such opportunity is
one that we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue and (ii) the
director or officer is permitted to refer that opportunity to us without violating any legal obligation.
Our directors and officers
or their respective affiliates may pursue acquisition opportunities that may be complementary to our business and, as a result of the
waiver described above, those acquisition opportunities may not be available to us. In addition, our directors and officers or their respective
affiliates may have an interest in pursuing acquisitions, divestitures and other transactions that, in its judgment, could enhance its
investment, even though such transactions might involve risks to you.
We are a holding company with no operations
of our own, and we depend on our subsidiaries for cash to fund all of our operations, taxes and other expenses and any dividends that
we may pay.
Our operations are conducted
entirely through our subsidiaries. Our ability to generate cash to meet our debt and other obligations, to cover all applicable taxes
payable and to declare and pay any dividends on our Class A Common Stock is dependent on the earnings and the receipt of funds through
distributions from our subsidiaries. Our subsidiaries' respective abilities to generate adequate cash depends on a number of factors,
including development of reserves, successful acquisitions of complementary properties, advantageous drilling conditions, natural gas,
oil prices, compliance with all applicable laws and regulations and other factors.
Because the currently outstanding shares
of Class A Common Stock that are being registered in this prospectus represent a substantial percentage of our outstanding Class A Common
Stock, the sale of such securities could cause the market price of our Class A Common Stock to decline significantly.
This prospectus relates to
the offer and sale from time to time by the Selling Securityholders of an aggregate of up to 79,050 shares of our currently outstanding
Class A Common Stock, consisting of the Exchange Shares and the Services Shares, and the offer and sale from time to time by White Lion
of up to 5,000,000 additional shares of Class A Common Stock that we may sell to White Lion, from time to time at our sole discretion,
pursuant to the Common Stock Purchase Agreement.
The number of shares of Class
A Common Stock that the Selling Securityholders can sell into the public markets pursuant to this prospectus represents a significant
amount of our outstanding shares of Class A Common Stock. As of January 15, 2025, there were 12,895,544 shares of Class A Common Stock
outstanding. If all shares being registered hereby were sold, it would comprise approximately 28.4% of our total shares of Class A Common
Stock outstanding. If we assume that all of the White Lion ELOC Shares registered in the Prior Registration Statement have been issued
and resold pursuant to the Prior Registration Statement, the Company would have 13,545,544 shares of Class A Common Stock outstanding,
and if all shares being registered hereunder were sold, it would comprise approximately 27.4% of our total shares of Class A Common Stock.
Given the substantial number of shares of Class A Common Stock registered pursuant to this prospectus, the sale of Class A Common Stock
by the Selling Securityholders, or the perception in the market that the Selling Securityholders of a large number of shares of Class
A Common Stock intend to sell Class A Common Stock, could increase the volatility of the market price of our Class A Common Stock or result
in a significant decline in the public trading price of our Class A Common Stock.
In addition, even though the
current market price of our Class A Common Stock is significantly below the price at the time of our initial public offering, certain
Selling Securityholders have an incentive to sell because they have purchased their Class A Common Stock at prices lower than the current
trading price of the Class A Common Stock, and they may profit even under circumstances in which our public stockholders or certain other
Selling Securityholders would experience losses in connection with their investment. The securities being registered for resale were issued
to, purchased by or will be purchased by the Selling Securityholders for the following consideration: (i) a purchase price yet to be determined
for the ELOC Shares (as described herein), (ii) a purchase of price of $1.00 per share of Class A Common Stock for the Exchange Shares,
and (iii) a purchase of price of $0.82 per share of Class A Common Stock for the Service Shares. If the Selling Securityholders were to
sell the shares of Class A Common Stock at a price of $1.09 per share (the last reported sale price of our Class A Common Stock on January
15, 2025), they would recognize a profit or loss as follows: (i) an unknown profit or loss for the ELOC Shares, (ii) a profit of approximately
$0.09 per share for the Exchange Shares, and (iii) a gain of approximately $0.27 per share for the Service Shares.
Investors who purchase Class
A Common Stock on the NYSE American following the Purchase are unlikely to experience a similar rate of return on the Class A Common Stock
they purchase due to differences in the purchase prices and the current trading price referenced above. In addition, sales by the Selling
Securityholders may cause the trading prices of our securities to experience a decline. As a result, the Selling Securityholders may effect
sales of Class A Common Stock at prices significantly below the current market price, which could cause market prices to decline further.
38
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements under
"Prospectus Summary," "Risk Factors," "Management's Discussion and Analysis of Financial Condition
and Results of Operations," "Business," and elsewhere in this prospectus constitute forward-looking statements. These
statements involve risks known to us, significant uncertainties, and other factors which may cause our actual results, levels of activity,
performance, or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed
or implied by those forward-looking statements. All statements, other than statements of present or historical fact, included in this
prospectus concerning our strategy, future operations, financial condition, estimated revenues and losses, projected costs, prospects,
plans and objectives of management are forward-looking statements. Words such as "could," "believe," "should,"
"will," "may," "believe," "anticipate," "intend," "estimate,"
"expect," "project," the negative of such terms and other similar expressions are used to identify forward-looking
statements, although not all forward-looking statements contain such identifying words. Without limiting the generality of the foregoing,
forward-looking statements contained in this prospectus include statements regarding our financial position, business strategy and other
plans and objectives for future operations or transactions, and expectations and intentions regarding outstanding litigation,. These forward-looking
statements are based on current expectations and assumptions of management about future events and are based on currently available information
as to the outcome and timing of future events. Such forward-looking statements can be affected by assumptions used or by known or unknown
risks or uncertainties, most of which are difficult to predict and many of which are beyond our control, incident to the development,
production, gathering and sale of oil and natural gas. Consequently, no forward-looking statements can be guaranteed.
A forward-looking statement
may include a statement of the assumptions or bases underlying the forward-looking statement. We believe that it has chosen these assumptions
or bases in good faith and that they are reasonable. However, when considering these forward-looking statements, you should keep in mind
the risk factors and other cautionary statements described under the heading "Risk Factors". Actual results may vary materially.
You are cautioned not to place undue reliance on any forward-looking statements. You should also understand that it is not possible to
predict or identify all such factors and should not consider the following list to be a complete statement of all potential risks and
uncertainties. Factors that could cause actual results to differ materially from the results contemplated by such forward-looking statements
include:
●
the financial and business performance of EON;
●
the ability to maintain the listing of the Class A Common Stock and the public warrants on EON American, and the potential liquidity and trading of such securities;
●
the diversion of management in connection with the Purchase and EON's ability to successfully integrate Pogo's operations and achieve or realize fully or at all the anticipated benefits, savings or growth of the Transactions;
●
the impact of the announcement of the Purchase on relationships with third parties, including commercial counterparties, employees and competitors, and risks associated with the loss and ongoing replacement of key personnel;
●
EON's abilities to execute its business strategies;
●
changes in general economic conditions, including the material and adverse negative consequences of the COVID-19 pandemic and its unfolding impact on the global and national economy and/or as a result of the armed conflict in Ukraine and associated economic sanctions on Russia;
●
the actions of the Organization of Petroleum Exporting Countries ("OPEC") and other significant producers and governments, including the armed conflict in Ukraine and the potential destabilizing effect such conflict may pose for the global oil and natural gas markets, and the ability of such producers to agree to and maintain oil price and production controls;
●
the effect of change in commodity prices, including the volatility of realized oil and natural gas prices, as a result of the Russian invasion of Ukraine that has led to significant armed hostilities and a number of severe economic sanctions on Russia or otherwise;
●
the level of production on our properties;
●
overall and regional supply and demand factors, delays, or interruptions of production;
●
our ability to replace our oil and natural gas reserves;
●
ability to identify, complete and integrate acquisitions of properties or businesses;
●
general economic, business or industry conditions, including the cost of inflation;
39
●
competition in the oil and natural gas industry;
●
conditions in the capital markets and our ability, and the ability of our operators, to obtain capital or financing on favorable terms or at all;
●
title defects in the properties in which EON invests;
●
risks associated with the drilling and operation of crude oil and natural gas wells, including uncertainties with respect to identified drilling locations and estimates of reserves;
●
the availability or cost of rigs, equipment, raw materials, supplies, oilfield services or personnel;
●
restrictions on the use of water;
●
the availability of pipeline capacity and transportation facilities;
●
the ability of our operators to comply with applicable governmental laws and regulations, including environmental laws and regulations and to obtain permits and governmental approvals;
●
the effect of existing and future laws and regulatory actions, including federal and state legislative and regulatory initiatives relating to hydraulic fracturing and environmental matters, including climate change;
●
future operating results;
●
risk related to our hedging activities;
●
exploration and development drilling prospects, inventories, projects, and programs;
●
the impact of reduced drilling activity in our focus areas and uncertainty in whether development projects will be pursued;
●
operating hazards faced by our operators;
●
technological advancements;
●
weather conditions, natural disasters and other matters beyond our control; and
●
certain risks and uncertainties discussed elsewhere in this prospectus, including those under the heading "Risk Factors" and other filings that have been made or will be made with the SEC.
We caution that the foregoing
list of factors is not exclusive. We may be subject to currently unforeseen risks that may have a materially adverse effect on it. All
subsequent written and oral forward-looking statements concerning us other matters attributable to us, or any person acting on our behalf,
are expressly qualified in their entirety by the cautionary statements above. The forward-looking statements speak only as of the date
made and, other than as required by law, we do not undertake any obligation to update publicly or revise any of these forward-looking
statements.
Although we believe that the
exceptions reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance
or achievements.
40
WHITE LION CAPITAL COMMITTED EQUITY FINANCING
General
On October 17, 2022, we entered
into a common stock purchase agreement (as amended the "Common Stock Purchase Agreement") and a related registration rights
agreement (the "White Lion RRA") with White Lion Capital, LLC, a Nevada limited liability company ("White Lion").
On March 7, 2024, we entered into an Amendment No. 1 to the Common Stock Purchase Agreement. On June 17, 2024, the Company entered into
an Amendment No. 2 to Common Stock Purchase Agreement (the "2nd Amendment") with White Lion. Pursuant to the 2nd Amendment,
the Company and White Lion agreed to amend the process of a Rapid Purchase, whereby the parties will close on the Rapid Purchase on the
trading day the notice of the applicable Rapid Purchase is given. The 2nd Amendment, among other things, also removed the maximum number
of shares required to be purchased upon notice of a Rapid Purchase, added a limit of 100,000 shares of Common Stock per individual request,
and revised the purchase price of a Rapid Purchase to equal the lowest traded price of Common Stock during the one hour following White
Lion's acceptance of the Rapid Purchase for each request. In addition, White Lion agreed that, on any single business day, it shall
not publicly resell an aggregate amount of Commitment Shares in an amount that exceeds 7% of the daily trading volume of the Common Stock
for such business day, excluding any trades before or after regular trading hours and any block trades. Pursuant to the Common Stock Purchase
Agreement, we have the right, but not the obligation to require White Lion to purchase, from time to time, up to $150,000,000 in aggregate
gross purchase price of newly issued shares of our Class A Common Stock, subject to certain limitations and conditions set forth in the
Common Stock Purchase Agreement. Capitalized terms used but not otherwise defined herein shall have the meaning given to such terms by
the Common Stock Purchase Agreement.
We are obligated under the
Common Stock Purchase Agreement and the White Lion RRA to file a registration statement with the SEC to register the common stock under
the Securities Act of 1933, as amended, for the resale by White Lion of shares of Class A Common Stock we may issue to White Lion under
the Common Stock Purchase Agreement. In accordance with our obligations under the White Lion RRA, we filed the Prior Registration Statement,
pursuant to which we have sold 4,350,000 shares of our Class A Common Stock pursuant to the Purchase Agreement for proceeds of approximately
$4.9 million, and we may receive available proceeds of up to approximately $145.1 remaining under the facility from the sale of the shares
of Class A Common Stock to White Lion under the Common Stock Purchase Agreement. We have sold 4,350,000 on the Prior Registration Statement
with 650,000 shares remaining available for issuance and resale by White Lion. It is the intent of the parties for White Lion to sell
all remaining shares registered on the Prior Registration Statement before reselling any shares issuable under the Common Stock Purchase
Agreement being registered hereunder. Therefore, we have filed the registration statement that includes this prospectus with the SEC to
register under the Securities Act the resale by White Lion of additional shares of Class A Common Stock that we may issue to White Lion
under the Common Stock Purchase Agreement.
Subject to the satisfaction
of certain customary conditions our right to sell shares to White Lion will extend until December 31, 2026. During such term, subject
to the terms and conditions of the Common Stock Purchase Agreement, we may notify White Lion when we exercise our right to sell shares
(the effective date of such notice, a "Notice Date").
In addition, we may, from
time to time while a purchase notice is active, issue a Rapid Purchase Notice to White Lion for the purchase of shares (not to exceed
100,000 shares per individual request) at a purchase price equal to the lowest traded price of Common Stock during the one hour following
White Lion's acceptance of the Rapid Purchase for each request, and the parties will close on the Rapid Purchase on the trading
day the notice of the applicable Rapid Purchase is given. Furthermore, White Lion agreed that, on any single Business Day, it shall not
publicly resell an aggregate amount of Commitment Shares in an amount that exceeds 7% of the daily trading volume of our Class A Common
Stock for such Business Day, excluding any trades before or after regular trading hours and any block trades.
During such term we will control
the timing and amount of any sales of our Class A Common Stock to White Lion. Actual sales of shares of our Class A Common Stock to White
Lion under the Common Stock Purchase Agreement will depend on a variety of factors to be determined by us from time to time, including,
among others, market conditions, the trading price of the Class A Common Stock and determinations by us as to the appropriate sources
of funding for our company and our operations.
41
The number of shares sold
pursuant to any such purchase notice may not exceed (i) the lower of (a) $2,000,000 and (b) the dollar amount equal to the product of
(1) the Effective Daily Trading Volume (2) the closing price of common stock on the Effective Date (3) 400% and (4) 30%, divided by the
closing price of common stock on NYSE American preceding the Notice Date and (ii) a number of shares of common stock equal to the Average
Daily Trading Volume multiplied by the Percentage Limit. The purchase price to be paid by White Lion for any such shares will equal 96%
of the lowest daily volume-weighted average price of common stock during a period of two consecutive trading days following the applicable
Notice Date.
The net proceeds from sales,
if any, under the Common Stock Purchase Agreement, will depend on the frequency and prices at which we sell shares of Class A Common Stock
to White Lion. To the extent we sells share under the Common Stock Purchase Agreement, we currently plan to use any proceeds therefrom
for costs of this transaction, for working capital, strategic and other general corporate purposes.
We have the right to terminate
the Common Stock Purchase Agreement at any time after Commencement Date, at no cost or penalty, upon three trading days' prior written
notice. Additionally, White Lion will have the right to terminate the Common Stock Purchase Agreement upon three days' prior written
notice to us if (i) there is a Fundamental Transaction, (ii) we are in breach or default in any material respect of the White Lion RRA,
(iii) there is a lapse of the effectiveness, or unavailability of, the registration statement that includes this prospectus for a period
of 45 consecutive trading days or for more than an aggregate of 90 trading days in any 365-day period, (iv) the suspension of trading
of the common stock for a period of five consecutive trading days, (v) our material breach of the Common Stock Purchase Agreement, which
breach is not cured within the applicable cure period or (vi) a Material Adverse Effect has occurred and is continuing. No termination
of the Common Stock Purchase Agreement will affect the registration rights provisions contained in the White Lion RRA.
In consideration for White
Lion's execution and delivery of the Common Stock Purchase Agreement, we issued to White Lion 440,000 shares of Class A Common Stock
(the "Commitment Shares").
The Common Stock Purchase
Agreement does not include any of the following: (i) limitations on our use of amounts we receive as the purchase price for shares of
Class A Common Stock sold to White Lion; (ii) financial or business covenants; (iii) restrictions on future financings (other than restrictions
on its ability to enter into other equity line of credit transactions or transactions that are similar thereto); (iv) rights of first
refusal; or (v) participation rights or penalties.
As of January 15, 2025, there
were 12,895,544 shares of our Class A Common Stock outstanding. Although the Common Stock Purchase Agreement provides that we may sell
up to an aggregate of $150,000,000 of shares of our Class A Common Stock to White Lion, only 5,000,000 shares of our Class A Common Stock
are being registered for resale by White Lion under this prospectus. Depending on the market prices of our Class A Common Stock at the
time we elect to issue and sell shares of our Class A Common Stock White Lion under the Common Stock Purchase Agreement, we may need to
register for resale under the Securities Act additional shares of our Class A Common Stock in order to receive aggregate gross proceeds
equal to the $150,000,000 total commitment available to us under the Common Stock Purchase Agreement. If all of such 5,000,000 shares
of our Class A Common Stock offered hereby were issued and outstanding as of January 15, 2025, such shares would represent approximately
27.9% of the total number of outstanding shares of Class A Common Stock, and approximately 32.1% of the total number of outstanding shares
of Class A Common Stock held by non-affiliates upon effectiveness of the registration statement of which this prospectus is made a part
(assuming all of the 5,000,000 shares are included in the number of outstanding shares of Class A Common Stock held by non-affiliates).
In addition, if all of such 5,000,000 shares of our Class A Common Stock offered hereby were issued and outstanding as of January 15,
2025, such shares would represent approximately 27.2% of the total number of shares entitled to vote at a meeting of stockholders, and
approximately 31.1% of the total number of shares entitled to vote at a meeting of stockholders held by non-affiliates upon effectiveness
of the registration statement of which this prospectus is made a part (assuming all of the 5,000,000 shares are included in the number
of shares entitled to vote at a meeting of stockholders held by non-affiliates). If we elect to issue and sell to White Lion under the
Common Stock Purchase Agreement more than the 5,000,000 shares of our Class A Common Stock being registered for resale by White Lion under
this prospectus, which we have the right, but not the obligation, to do, we must first register for resale under the Securities Act any
such additional shares of our Class A Common Stock, which could cause additional substantial dilution to our shareholders. The number
of shares of our Class A Common Stock ultimately offered for sale by White Lion is dependent upon the number of shares purchased by White
Lion under the Common Stock Purchase Agreement.
Issuances of our Class A Common
Stock to White Lion under the Purchase Agreement will not affect the rights or privileges of our existing shareholders, except that the
economic and voting interests of each of our existing shareholders will be diluted as a result of any such issuance. Although the number
of shares of our Class A Common Stock that our existing shareholders own will not decrease, the shares of our Class A Common Stock owned
by our existing shareholders will represent a smaller percentage of our total outstanding shares of our Class A Common Stock after any
such issuance of shares of our Class A Common Stock to White Lion under the Common Stock Purchase Agreement. There are substantial risks
to our shareholders as a result of the sale and issuance of Class A Common Stock to White Lion under the Purchase Agreement. See the section
entitled "
Risk Factors
."
No Short-Selling or Hedging by White Lion
White Lion has represented
to us that at no time prior to the date of the Common Stock Purchase Agreement has White Lion or its agents, representatives or affiliates
engaged in or effected, in any manner whatsoever, directly or indirectly, any short sale (as such term is defined in Rule 200 of
Regulation SHO of the Exchange Act) of our Class A Common Stock or any hedging transaction, which establishes a net short position
with respect to our Class A Common Stock. White Lion has agreed that during the term of the Common Stock Purchase Agreement, neither White
Lion, nor any of its agents, representatives or affiliates will enter into or effect, directly or indirectly, any of the foregoing transactions.
42
Effect of Performance of the Common Stock Purchase
Agreement on our Stockholders
All shares registered in this
offering that may be issued or sold by us to White Lion under the Common Stock Purchase Agreement are expected to be freely tradable.
The resale by White Lion of a significant number of shares registered in this offering at any given time, or the perception that these
sales may occur, could cause the market price of our Class A Common Stock to decline and to be highly volatile. Sales of our Class A Common
Stock to White Lion, if any, will depend upon market conditions and other factors to be determined by us. We may ultimately decide to
sell to White Lion all, some or none of the additional shares of our Class A Common Stock that may be available for us to sell pursuant
to the Common Stock Purchase Agreement. If and when we do sell shares to White Lion, after White Lion has acquired the shares, White Lion
may resell all, some or none of those shares of Class A Common Stock at any time or from time to time in its discretion. Therefore, sales
to White Lion by us under the Common Stock Purchase Agreement may result in substantial dilution to the interests of other holders of
our Class A Common Stock. In addition, if we sell a substantial number of shares to White Lion under the Common Stock Purchase Agreement,
or if investors expect that we will do so, the actual sales of shares or the mere existence of our arrangement with White Lion may make
it more difficult for us to sell equity or equity-related securities in the future at a time and at a price that we might otherwise wish
to effect such sales. However, we have the right to control the timing and amount of any additional sales of Class A Common Stock to White
Lion and the Common Stock Purchase Agreement may be terminated by us at any time at our discretion without any cost to us, subject to
certain conditions.
Pursuant to the terms of the
Common Stock Purchase Agreement, we have the right, but not the obligation, to direct White Lion to purchase up to $150,000,000 of our
Class A Common Stock, subject to certain limitations. If we elect to issue and sell to White Lion under the Common Stock Purchase Agreement
more than the 5,000,000 shares of our Class A Common Stock being registered for resale by White Lion under this prospectus, which we have
the right, but not the obligation, to do, we must first register for resale under the Securities Act any such additional shares of our
Class A Common Stock, which could cause additional substantial dilution to our shareholders. The number of shares of our Class A Common
Stock ultimately offered for sale by White Lion is dependent upon the number of shares purchased by White Lion under the Common Stock
Purchase Agreement.
The following table sets forth
the amount of gross proceeds we would receive from White Lion from our sale of shares of Class A Common Stock to White Lion under the
Common Stock Purchase Agreement at varying purchase prices:
Assumed Average Purchase Price Per
    Share
Number of
Registered
ELOC
Shares to
be Issued if Full
Purchase
(1)
Percentage of
Outstanding Shares
After Giving
Effect to the
Issuance of
the ELOC
Shares
(2)
Percentage of
Outstanding Shares
After Giving
Effect to the
Issuance of
the ELOC
Shares and
the shares
registered
under the
Prior
Registration
Statement
(3)
Gross Proceeds from
the Sale of
the ELOC
Shares to
White Lion
$
0.50
5,000,000
27.94
%
26.96
%
$
2,500,000
$
0.75
5,000,000
27.94
%
26.96
%
$
3,750,000
$
1.00
5,000,000
27.94
%
26.96
%
$
5,000,000
$
1.09
(4)
5,000,000
27.94
%
26.96
%
$
5,450,000
$
1.25
5,000,000
27.94
%
26.96
%
$
6,250,000
$
1.50
5,000,000
27.94
%
26.96
%
$
7,500,000
(1)
Although
the Common Stock Purchase Agreement provides that we may sell up to $145.1 million of our Class A Common Stock in remaining available
proceeds to White Lion, we are only registering 5,000,000 shares under this prospectus that we may issue and sell to White Lion in the
future under the Common Stock Purchase Agreement, if and when we elect to sell shares of our Class A Common Stock to White Lion under
the Common Stock Purchase Agreement.
(2)
The
denominator is based on 12,895,544 shares of our Class A Common Stock outstanding as of January 15, 2025, plus the number of shares set
forth in the adjacent column that we would have issued or sold to White Lion, assuming the average purchase price in the first column.
The numerator is based on the number of shares of our Class A Common Stock issuable under the Common Stock Purchase Agreement (that are
the subject of this offering) at the corresponding assumed average purchase price set forth in the first column.
(3)
The denominator is based on 12,895,544 shares of our Class A Common Stock outstanding as of January 15, 2025, plus the number of shares set forth in the adjacent column that we would have issued or sold to White Lion, assuming the average purchase price in the first column, plus the 650,000 shares remaining available for issuance and resale by White Lion under the Prior Registration Statement. The numerator is based on the number of shares of our Class A Common Stock issuable under the Common Stock Purchase Agreement (that are the subject of this offering) at the corresponding assumed average purchase price set forth in the first column.
(4)
The closing sale price of our Class A Common Stock on January 15, 2025.
43
USE OF PROCEEDS
All of the securities offered
by the Selling Securityholders pursuant to this prospectus will be sold by the Selling Securityholders for their respective accounts.
We will not receive any of the proceeds from these sales, except we may receive proceeds of up to $145.1 in remaining available proceeds
from the sale of the shares to White Lion under the Common Stock Purchase Agreement (assuming 4,350,000 shares have been previously issued
and sold by the Company to White Lion as of the date of this prospectus), from time to time in our discretion after the date the registration
statement that includes this prospectus is declared effective and after satisfaction of other conditions in the Common Stock Purchase
Agreement. See "
Plan of Distribution
" elsewhere in this prospectus for more information.
We expect to use the net proceeds
from the sales pursuant to the Common Stock Purchase Agreement, if any, for general corporate purposes. We will have broad discretion
over the use of any proceeds from such sales or exercise. We cannot specify with certainty all of the particular uses for the net proceeds
that we will have from the sale of our shares pursuant to the Common Stock Purchase Agreement.
The Selling Securityholders
will pay any underwriting discounts and commissions and expenses incurred by them for brokerage, accounting, tax or legal services or
any other expenses incurred in disposing of the securities. We will bear the costs, fees and expenses incurred in effecting the registration
of the securities covered by this prospectus, including all registration and filing fees, NYSE American listing fees and fees and expenses
of our counsel and our independent registered public accounting firm.
44
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
Introduction
EON Resources Inc. is providing
the following unaudited pro forma combined financial information to aid EON's stockholders in their analysis of the financial aspects
of the Purchase. The unaudited pro forma combined financial information has been prepared in accordance with Article 11 of Regulation S-X.
The unaudited pro forma combined statement of operations for the year ended December 31, 2023 combines the historical statements of operations
of EON and Pogo for such periods on a pro forma basis as if the Purchase had been consummated on January 1, 2023. An unaudited pro
forma combined balance sheet is not presented since the Company's audited consolidated balance sheet as of December 31, 2023 included
in its Annual Report on Form 10-K filed with the SEC on May 3, 2024 includes the effect of the Purchase. An unaudited pro forma combined
statement of operations for the three months ended March 31, 2024 or the three and six months ended June 30, 2024 is not presented since
the Company's unaudited consolidated statement of operations for the three months ended March 31, 2024 included in its Quarterly
Report on Form 10-Q filed with the SEC on May 20, 2024 and the three and six months ended June 30, 2024 included in its Quarterly Report
on Form 10-Q filed with the SEC on August 19, 2024, include the effect of the Purchase.
The unaudited pro forma combined
financial information has been presented for illustrative purposes only and is not necessarily indicative of the financial position and
results of operations that would have been achieved had the Purchase occurred on the dates indicated. The unaudited pro forma combined
financial information may not be useful in predicting the future financial condition and results of operations of the Post-Purchase company.
The actual financial position and results of operations may differ significantly from the pro forma amounts reflected herein due to a
variety of factors. The unaudited pro forma adjustments represent management's estimates based on information available as of the
date of the unaudited pro forma combined financial information and is subject to change as additional information becomes available and
analyses are performed. This information should be read together with EON's audited consolidated financial statements and related
footnotes and Management's Discussion and Analysis for the period from November 15, 2023 to December 31, 2023 (Successor),
the period from January 1, 2023 to November 14, 2023 (Predecessor) included in the Form 10-K for the year ended December 31, 2023
filed with the SEC on May 3, 2024 (the "EON Form 10-K"), EON's unaudited consolidated financial statements and related
footnotes and Management's Discussion and Analysis for the three months ended March 31, 2024 included in the Form 10-Q for the three
months ended March 31, 2024 filed with the SEC on May 20, 2024, EON's unaudited consolidated financial statements and related footnotes
and Management's Discussion and Analysis for the three and six months ended June 30, 2024 included in the Form 10-Q for the three
and six months ended June 30, 2024 filed with the SEC on August 19, 2024 and other financial information included in the prospectus.
The Purchase was accounted
for as a business combination in accordance with GAAP. EON was determined to be the accounting acquirer based on an evaluation of
the following facts and circumstances:
●
EON's
senior management will comprise the senior management of the combined company;
●
EON
will control a majority of the initial Board of Directors;
●
EON's
existing equityholders will have a majority voting interest in the Post-Combination company.
On November 15, 2023 (the
"Closing Date"), as contemplated by the MIPA:
●
EON
filed a Second Amended and Restated Certificate of Incorporation (the "Second A&R Charter") with the Secretary of State
of the State of Delaware, pursuant to which the number of authorized shares of EON's capital stock, par value $0.0001 per share,
was increased to 121,000,000 shares, consisting of (i) 100,000,000 shares of Class A common stock, par value $0.0001 per share (the "Class
A Common Stock"), (ii) 20,000,000 shares of Class B common stock, par value $0.0001 per share (the "Class B Common Stock"),
and (iii) 1,000,000 shares of preferred stock, par value $0.0001 per share;
●
The
current shares of common stock of EON were reclassified as Class A Common Stock, the Class B Common Stock have no economic rights but
entitles its holder to one vote on all matters to be voted on by stockholders generally, holders of shares of Class A Common Stock and
shares of Class B Common Stock will vote together as a single class on all matters presented to our stockholders for their vote or approval,
except as otherwise required by applicable law or by the Second A&R Charter;
45
●
(A) EON contributed to OpCo (i) all of its assets (excluding its interests in OpCo and the aggregate amount of cash required to satisfy any exercise by EON stockholders of their Redemption Rights (as defined below)) and (ii) 2,000,000 newly issued shares of Class B Common Stock (such shares, the "Seller Class B Shares") and (B) in exchange therefor, OpCo issued to EON a number of Class A common units of OpCo (the "OpCo Class A Units") equal to the number of total shares of Class A Common Stock issued and outstanding immediately after the closing (the "Closing") of the transactions (the "Transactions") contemplated by the EON (following the exercise by EON stockholders of their Redemption Rights) (such transactions, the "SPAC Contribution");
●
Immediately following the SPAC Contribution, OpCo contributed $900,000 to SPAC Subsidiary in exchange for 100% of the outstanding common stock of SPAC Subsidiary (the "SPAC Subsidiary Contribution"); and
●
Immediately following the SPAC Subsidiary Contribution, Seller sold, contributed, assigned, and conveyed to (A) OpCo, and OpCo acquired and accepted from Seller, ninety-nine percent (99.0%) of the outstanding membership interests of Pogo Resources, LLC, a Texas limited liability company ("Pogo" or the "Target"), and (B) SPAC Subsidiary, and SPAC Subsidiary purchased and accepted from Seller, one percent (1.0%) of the outstanding membership interest of Target (together with the ninety-nine (99.0%) interest, the "Target Interests"), in each case, in exchange for (x) $900,000 of the Cash Consideration (as defined below) in the case of SPAC Subsidiary and (y) the remainder of the Aggregate Consideration (as defined below) in the case of OpCo (such transactions, together with the SPAC Contribution and SPAC Subsidiary Contribution, the "Acquisition").
The "Aggregate Consideration"
for the Pogo Business was (a), cash in the amount of $31,074,127 in immediately available funds (the "Cash Consideration"),
(b) 2,000,000 Class B common units of OpCo ("OpCo Class B Units") (the "Common Unit Consideration"), which will
be equal to and exchangeable into 2,000,000 shares of Class A Common Stock issuable upon exercise of the OpCo Exchange Right (as
defined below), as reflected in the amended and restated limited liability company agreement of OpCo that became effective at Closing
(the "A&R OpCo LLC Agreement"), (c) and the 2,000,000 Seller Class B Shares, (d) $15,000,000 payable through a promissory
note to Seller (the "Seller Promissory Note"), (e) 1,500,000 preferred units of OpCo (the "OpCo Preferred Units"
and together with the Opco Class A Units and the OpCo Class B Units, the "OpCo Units") of OpCo (the "Preferred Unit
Consideration", and, together with the Common Unit Consideration, the "Unit Consideration"), and (f) an agreement to,
on or before November 21, 2023, Buyer shall settle and pay to Seller $1,925,873 from sales proceeds received from oil and gas production
attributable to Pogo, including pursuant to its third party contract with affiliates of Chevron. At Closing, 500,000 Seller Class B Shares
(the "Escrowed Share Consideration") were placed in escrow for the benefit of Buyer pursuant to an escrow agreement and the
indemnity provisions in the MIPA. The Aggregate Consideration is subject to adjustment in accordance with the MIPA.
Effective June 20, 2024, the
Company and the Seller entered into a settlement agreement and release. Under the settlement agreement and release, and in settlement
of the working capital provisions of the Amended MIPA, the Seller agreed to waive all rights and claims to the amount of royalties payable
under the ORRI as of December 31, 2023, totaling $1,523,138 and agreed to pay certain amounts related to vendor payable claims assumed
by the Company at Closing.
OpCo A&R LLC Agreement
In connection with the Closing,
EON and Pogo Royalty, LLC, a Texas limited liability company, an affiliate of Seller and Seller's designated recipient of the Aggregate
Consideration ("Pogo Royalty"), entered into an amended and restated limited liability company agreement of OpCo (the "OpCo
A&R LLC Agreement"). Pursuant to the A&R OpCo LLC Agreement, each OpCo unitholder (excluding EON) will, subject to certain
timing procedures and other conditions set forth therein, have the right(the "OpCo Exchange Right") to exchange all or a portion
of its OpCo Class B Units for, at OpCo's election,(i) shares of Class A Common Stock at an exchange ratio of one share of Class
A Common Stock for each OpCo Class B Unit exchanged, subject to conversion rate adjustments for stock splits, stock dividends and reclassifications
and other similar transactions, or (ii) an equivalent amount of cash. Additionally, the holders of OpCo Class B Units will be required
to exchange all of their OpCo Class B Units (a "Mandatory Exchange") upon the occurrence of the following: (i) upon the direction
of EON with the consent of at least fifty percent (50%) of the holders of OpCo Class B Units; or (ii) upon the one-year anniversary of
the Mandatory Conversion Trigger Date. In connection with any exchange of OpCo Class B Units pursuant to the OpCo Exchange Right or acquisition
of OpCo Class B Units pursuant to a Mandatory Exchange, a corresponding number of shares of Class B Common Stock held by the relevant
OpCo unitholder will be cancelled.
46
Immediately upon the Closing,
Pogo Royalty exercised the OpCo Exchange Right as it relates to 200,000 OpCo Class B units (and 200,000 shares of Class B Common Stock).
The OpCo Preferred Units will
be automatically converted into OpCo Class B Units on the two-year anniversary of the issuance date of such OpCo Preferred Units (the
"Mandatory Conversion Trigger Date") at a rate determined by dividing (i) $20.00 per unit (the "Stated Conversion
Value"), by (ii) the Market Price of the Class A Common Stock, (the "Conversion Price"). The "Market
Price" means the simple average of the daily VWAP of the Class A Common Stock during the five (5) trading days prior to
the date of conversion. On the Mandatory Conversion Trigger Date, the Company will issue a number of shares of Class B Common Stock
to Seller equivalent to the number of OpCo Class B Units issued to Seller. If not exchanged sooner, such newly issued OpCo Class B
Units shall automatically exchange into Class A Common Stock on the one-year anniversary of the Mandatory Conversion Trigger
Date at a ratio of one OpCo Class B Unit for one share of Class Common Stock. An equivalent number of shares of Class B
Common Stock must be surrendered with the OpCo Class B Units to the Company in exchange for the Class A Common Stock. As
noted above, the OpCo Class B Units must be exchanged upon the one-year anniversary of the Mandatory Conversion Trigger Date.
Option Agreement
In connection with the Closing,
HNRA Royalties, LLC, a newly formed Delaware limited liability company and wholly-owned subsidiary of EON ("HNRA Royalties")
and Pogo Royalty entered into an Option Agreement (the "Option Agreement"). Pogo Royalty owns certain overriding royalty interests
in certain oil and gas assets owned by Pogo Resources, LLC (the "ORR Interest"). Pursuant to the Option Agreement, Pogo Royalty
granted irrevocable and exclusive option to HNRA Royalties to purchase the ORR Interest for the Option Price (as defined below) at any
time prior to November 15, 2024. The option is not exercisable while the Seller Promissory Note is outstanding.
The purchase price for the
ORR Interest upon exercise of the option is: (i) (1) $30,000,000 the ("Base Option Price"), plus (2) an additional
amount equal to annual interest on the Base Option Price of twelve percent (12%), compounded monthly, from the Closing Date through the
date of acquisition of the ORR Interest, minus (ii) any amounts received by Pogo Royalty in respect of the ORR Interest from the
month of production in which the effective date of the Option Agreement occurs through the date of the exercise of the option (such aggregate
purchase price, the "Option Price").
The Option Agreement and the
option will immediately terminate upon the earlier of (a) Pogo Royalty's transfer or assignment of all of the ORR Interest
in accordance with the Option Agreement and (b) November 15, 2024. As consideration for the Option Agreement, EON issued 10,000 shares
of Class A Common Stock to Pogo Royalty with a fair value of $67,700. Pogo Royalty obtained the ORR Interest effective July 1, 2023, when
the Predecessor transferred to Pogo Royalty an assigned and undivided royalty interest equal in amount to ten percent (10%) of the Predecessors'
interest all oil, gas and minerals in, under and produced from each lease. The Predecessor recognized a loss on sale of assets of $816,011
in connection with this transaction.
Backstop Agreement
In connection with the Closing,
EON entered a Backstop Agreement (the "Backstop Agreement") with Pogo Royalty and certain of EON's founders listed therein
(the "Founders") whereby the Pogo Royalty will have the right ("Put Right") to cause the Founders to purchase
Seller's OpCo Preferred Units at a purchase price per unit equal to $10.00 per unit plus the product of (i) the number
of days elapsed since the effective date of the Backstop Agreement and (ii) $10.00 divided by 730. Seller's right to exercise
the Put Right will survive for six (6) months following the date the Trust Shares (as defined below) are not restricted from transfer
under the Letter Agreement (as defined in the MIPA) (the "Lockup Expiration Date").
As security that the Founders
will be able to purchase the OpCo Preferred Units upon exercise of the Put Right, the Founders agreed to place at least 1,300,000 shares
of Class A Common Stock into escrow (the "Trust Shares"), which the Founders can sell or borrow against to meet their
obligations upon exercise of the Put Right, with the prior consent of Seller. EON is not obligated to purchase the OpCo Preferred Units from
Pogo Royalty under the Backstop Agreement. Until the Backstop Agreement is terminated, Pogo Royalty and its affiliates are not permitted
to engage in any transaction which is designed to sell short the Class A Common Stock or any other publicly traded securities of
EON.
47
Founder Pledge Agreement
In connection with the Closing,
we entered a Founder Pledge Agreement (the "Founder Pledge Agreement") with the Founders whereby, in consideration of placing
the Trust Shares into escrow and entering into the Backstop Agreement, we agreed: (a) by January 15, 2024, to issue to the Founders an
aggregate number of newly issued shares of Class A Common Stock equal to 10% of the number of Trust Shares; (b) by January 15, 2024, to
issue to the Founders number of warrants to purchase an aggregate number of shares of Class A Common Stock equal to 10% of the number
of Trust Shares, which such warrants shall be exercisable for five years from issuance at an exercise price of $11.50 per shares; (c)
if the Backstop Agreement is not terminated prior to the Lockup Expiration Date, to issue an aggregate number of newly issued shares of
Class A Common Stock equal to (i) (A) the number of Trust Shares,
divided by
(B) the simple average of the daily
VWAP of the Class A Common Stock during the five (5) Trading Days prior to the date of the termination of the Backstop Agreement, subject
to a minimum of $6.50 per share,
multiplied by
(C) a price between $10.00-$13.00 per share (as further described in the
Founder Pledge Agreement),
minus
(ii) the number of Trust Shares; and (d) following the purchase of OpCo Preferred
Units by a Founder pursuant to the Put Right, to issue a number of newly issued shares of Class A Common Stock equal to the number
of Trust Shares sold by such Founder. Until the Founder Pledge Agreement is terminated, the Founders are not permitted to engage
in any transaction which is designed to sell short the Class A Common Stock or any other of our publicly traded securities.
The above description of the
Founder Pledge Agreement is a summary only and is qualified in its entirety by the text of the Founder Pledge Agreement. In consideration
for entering into the Backstop agreement, the Company issued the Founders an aggregate of 134,500 shares of Class A Common Stock, with
a fair value of $910,565 based on the closing price of the Company's common stock of $6.77 on November 15, 2023.
Debt Financing
Senior Secured Term Loan Agreement
In connection with the Closing,
we (for purposes of the Loan Agreement, the "Borrower") and First International Bank & Trust ("FIBT"
or "Lender"), OpCo, SPAC Subsidiary, Pogo, and LH Operating, LLC (for purposes of the Loan Agreement, collectively, the "Guarantors"
and together with the Borrower, the "Loan Parties"), and FIBT entered into a Senior Secured Term Loan Agreement on November
15, 2023 (the "Loan Agreement"), setting forth the terms of a senior secured term loan facility in an aggregate principal
amount of $28,000,000 (the "Term Loan").
Pursuant to the terms of the
Term Loan Agreement, the Term Loan was advanced in one tranche on the Closing Date. The proceeds of the Term Loan were used to (a) fund
a portion of the purchase price, (b) partially fund a debt service reserve account funded with $2,600,000 at the Closing Date, (c)
pay fees and expenses in connection with the purchase and the closing of the Term Loan and (e) other general corporate purposes. The Term
Loan accrues interest at a per annum rate equal to the FIBT prime rate plus 6.5% and fully matures on the third anniversary of the Closing
Date ("Maturity Date"). Payments of principal and interest will be due on the 15
th
day of each calendar
month, beginning December 15, 2023, each in an amount equal to the Monthly Payment Amount (as defined in the Term Loan Agreement), except
that the principal and interest payment due on the Maturity Date will be in the amount of the entire remaining principal amount of the
Term Loan and all accrued but unpaid interest then outstanding. An additional one-time payment of principal is due on the date the annual
financial report for the year ending December 31, 2024, is due to be delivered by Borrower to Lender in an amount that Excess Cash Flow
(as defined in the Term Loan Agreement) exceeds the Debt Service Coverage Ratio (as defined in the Term Loan Agreement) of 1.35x as of
the end of such quarter; provided that in no event shall the amount of the payment exceed $5,000,000.
The Borrower may elect to
prepay all or a portion greater than $1,000,000 of the amounts owed prior to the Maturity Date. In addition to the foregoing, the Borrower
is required to prepay the Term Loan with the net cash proceeds of certain dispositions and upon the decrease in value of collateral.
48
On the Closing Date, Borrower
deposited $2,600,000 into a Debt Service Reserve Account (the "Debt Service Reserve Account") and, within 60 days following
the Closing Date, Borrower must deposit such additional amounts such that the balance of the Debt Service Reserve Account is equal to
$5,000,000 at all times. The Debt Service Reserve Account may be used by Lender at any time and from time to time, in Lender's
sole discretion, to pay (or to supplement Borrower's payments of) the obligations due under the Term Loan Agreement.
The Term Loan Agreement contains
affirmative and restrictive covenants and representations and warranties. The Loan Parties are bound by certain affirmative covenants
setting forth actions that are required during the term of the Term Loan Agreement, including, without limitation, certain information
delivery requirements, obligations to maintain certain insurance, and certain notice requirements. Additionally, the Loan Parties from
time to time will be bound by certain restrictive covenants setting forth actions that are not permitted to be taken during the term of
the Term Loan Agreement without prior written consent, including, without limitation, incurring certain additional indebtedness, entering
into certain hedging contracts, consummating certain mergers, acquisitions or other business combination transactions, consummating certain
dispositions of assets, making certain payments on subordinated debt, making certain investments, entering into certain transactions with
affiliates, and incurring any non-permitted lien or other encumbrance on assets. The Term Loan Agreement also contains other customary
provisions, such as confidentiality obligations and indemnification rights for the benefit of the Lender. The Company was in compliance
with covenants of the Term Loan Agreement as of December 31, 2023.
Pledge and Security Agreement
In connection with the Term
Loan, FIBT and the Loan Parties entered into a Pledge and Security Agreement on November 15, 2023 (the "Security Agreement"),
whereby the Loan Parties granted a senior security interest to FIBT on all assets of the Loan Parties, except certain excluded assets
described therein, including, among other things, any interests in the ORR Interest.
Guaranty Agreement
In connection with the Term
Loan, FIBT and the Loan Parties entered into a Guaranty Agreement on November 15, 2023 (the "Guaranty Agreement"), whereby
the Guarantors guaranteed payment and performance of all Loan Parties under the Term Loan Agreement.
The Company paid deferred
finance costs of $1,093,318 related to the loan, which are reflect as debt discount. For the period from November 15, 2023 to December
31, 2023, the Company amortized $56,422 to interest expense. As of December 31, 2023, the principal balance on the Term Loan was $27,680,7063,
unamortized discount was $1,036,895 and accrued interest was $173,004.
Subordination Agreement
In connection with the Term
Loan and the Seller Promissory Note, the Lenders, the Sellers and the Company entered into a Subordination Agreement whereby the Sellers
cannot require repayment, nor commence any action or proceeding at law or equity against the Company or the Lenders to recover any or
all of the unpaid Seller Promissory Note until the Term Loan is repaid in full.
Seller Promissory Note
In connection with the Closing,
OpCo issued the Seller Promissory Note to Pogo Royalty in the principal amount of $15,000,000. The Seller Promissory Note matures on May
15, 2024, bears an interest rate equal 12% per annum, and contains no penalty for prepayment. If the Seller Promissory Note is not repaid
in full on or prior to its stated maturity date, OpCo will owe interest from and after default equal to the lesser of 18% per annum and
the highest amount permissible under law, compounded monthly. The Seller Promissory Note is subordinated to the Term Loan as discussed
above. Accrued interest on the Seller Promissory Note was $277,397 as of December 31, 2023. As a result of the Subordination Agreement,
the Company has classified the Seller Promissory Note as a long-term liability on the consolidated balance sheet.
49
Forward Purchase Agreement
On November 2, 2023, the Company
entered into an agreement with (i) Meteora Capital Partners, LP ("MCP"), (ii) Meteora Select Trading Opportunities Master,
LP ("MSTO"), and (iii) Meteora Strategic Capital, LLC ("MSC" and, collectively with MCP and MSTO, "FPA Seller")
(the "Forward Purchase Agreement") for OTC Equity Prepaid Forward Transactions. For purposes of the Forward Purchase Agreement,
the Company is referred to as the "Counterparty". Capitalized terms used herein but not otherwise defined shall have the meanings
ascribed to such terms in the Forward Purchase Agreement.
The Forward Purchase Agreement
provides for a prepayment shortfall in an amount in U.S. dollars equal to 0.50% of the product of the Recycled Shares and the Initial
Price (defined below). FPA Seller in its sole discretion may sell Recycled Shares (i) at any time following November 2, 2023 (the "Trade
Date") at prices greater than the Reset Price or (ii) commencing on the 180th day following the Trade Date at any sales price, in
either case without payment by FPA Seller of any Early Termination Obligation until such time as the proceeds from such sales equal 100%
of the Prepayment Shortfall (as set forth under the section entitled "Shortfall Sales" in the Forward Purchase Agreement)
(such sales, "Shortfall Sales," and such Shares, "Shortfall Sale Shares"). A sale of Shares is only (a) a "Shortfall
Sale," subject to the terms and conditions herein applicable to Shortfall Sale Shares, when a Shortfall Sale Notice is delivered
under the Forward Purchase Agreement, and (b) an Optional Early Termination, subject to the terms and conditions of the Forward Purchase
Agreement applicable to Terminated Shares, when an OET Notice is delivered under the Forward Purchase Agreement, in each case the delivery
of such notice in the sole discretion of the FPA Seller (as further described in the "Optional Early Termination" and "Shortfall
Sales" sections in the Forward Purchase Agreement).
Following the Closing, the
reset price (the "Reset Price") will be $10.00; provided that the Reset Price shall be reduced pursuant to a Dilutive Offering
Reset immediately upon the occurrence of such Dilutive Offering. The Purchased Amount subject to the Forward Purchase Agreement shall
be increased upon the occurrence of a Dilutive Offering Reset to that number of Shares equal to the quotient of (i) the Purchased Amount
divided by (ii) the quotient of (a) the price of such Dilutive Offering divided by (b) $10.00.
From time to time and on any
date following the Trade Date (any such date, an "OET Date") and subject to the terms and conditions in the Forward Purchase
Agreement, FPA Seller may, in its absolute discretion, terminate the Transaction in whole or in part by providing written notice to Counterparty
(the "OET Notice"), by the later of (a) the fifth Local Business Day following the OET Date and (b) no later than the next
Payment Date following the OET Date, (which shall specify the quantity by which the Number of Shares shall be reduced (such quantity,
the "Terminated Shares")). The effect of an OET Notice shall be to reduce the Number of Shares by the number of Terminated
Shares specified in such OET Notice with effect as of the related OET Date. As of each OET Date, Counterparty shall be entitled to an
amount from FPA Seller, and the FPA Seller shall pay to Counterparty an amount, equal to the product of (x) the number of Terminated Shares
and (y) the Reset Price in respect of such OET Date. The payment date may be changed within a quarter at the mutual agreement of the parties.
The "Valuation Date"
will be the earlier to occur of (a) the date that is three (3) years after the date of the closing of the Purchase & Sale (the date
of the closing of the Purchase & Sale, the "Closing Date") pursuant to the A&R MIPA, (b) the date specified by FPA
Seller in a written notice to be delivered to Counterparty at FPA Seller's discretion (which Valuation Date shall not be earlier
than the day such notice is effective) after the occurrence of any of (w) a VWAP Trigger Event, (x) a Delisting Event, (y) a Registration
Failure or (z) unless otherwise specified therein, upon any Additional Termination Event, and (c) the date specified by FPA Seller in
a written notice to be delivered to Counterparty at FPA Seller's sole discretion (which Valuation Date shall not be earlier than
the day such notice is effective). The Valuation Date notice will become effective immediately upon its delivery from FPA Seller to Counterparty
in accordance with the Forward Share Purchase Agreement.
On the "Cash Settlement
Payment Date," which is the tenth Local Business Day immediately following the last day of the Valuation Period, the FPA Seller
will remit to the Counterparty an amount equal to the Settlement Amount and will not otherwise be required to return to the Counterparty
any of the Prepayment Amount and the Counterparty shall remit to the FPA Seller the Settlement Amount Adjustment; provided, that if the
Settlement Amount less the Settlement Amount Adjustment is a negative number and either clause (x) of Settlement Amount Adjustment applies
or the Counterparty has elected pursuant to clause (y) of Settlement Amount Adjustment to pay the Settlement Amount Adjustment in cash,
then neither the FPA Seller nor the Counterparty shall be liable to the other party for any payment under the Cash Settlement Payment
Date section of the Forward Purchase Agreement.
50
The FPA Seller agreed to waive
any redemption rights with respect to any Recycled Shares in connection with the Closing, as well as any redemption rights under the Company's
certificate of incorporation that would require redemption by the Company.
The purpose of our entering
into this agreement and these transactions was to provide a mechanism whereby FPA Seller would purchase, and waive their redemption rights
with respect to, a sufficient number of shares of our common stock to enable us to have at least $5,000,000 of net tangible assets, a
non-waivable condition to the Closing of the Purchase, to provide the Company with cash to meet a portion of the transaction costs associated
with the Purchase, and to provide the Company with a mechanism to raise cash in the future at maturity. As of the date of this prospectus,
however, the Company has not made any issuances, and has not received any proceeds, from Meteora pursuant to the Forward Purchase Agreement,
and the Company is actively pursuing a mutual recission of the Forward Purchase Agreement.
Pursuant to the Forward Purchase
Agreement, the FPA Seller obtained 50,070 shares ("Recycled Shares") and such purchase price of $545,356, or $10.95 per
share, was funded by the use of our trust account proceeds as a partial prepayment ("Prepayment Amount"), and the FPA
Seller may purchase an additional 504,425 additional shares under the Forward Purchase Agreement, for the Forward Purchase Agreement redemption 3 years
from the date of the Acquisition ("Maturity Date").
The FPA Seller received an
additional $1,004,736 in cash from the Trust Account related to reimbursement for 90,000 shares of Class A Common stock purchased by the
FPA Seller in connection with the transactions at the redemption price of $10.95 per share and transaction fees.
The Maturity Date may be accelerated,
at the FPA Sellers' discretion, if the Company share price trades below $3.00 per share for any 10 trading days during
a 30-day consecutive trading-day period or the Company is delisted. The Company's common stock traded below minimum trading
price during the period from November 15, 2023 to December 31, 2023, but no acceleration of the Maturity Date has been executed by the
FPA Seller to date.
The fair value of the prepayment
was $14,257,648 at inception of the agreement, $6,066,324 as of the Closing date and was $6,067,094 as of December 31, 2023, and is included
as a reduction of additional paid-in capital on the consolidated statement of stockholders' equity. The estimated fair value of
the Maturity Consideration is $1,704,416. The Company recognized a gain from the change in fair value of the Forward Purchase Agreement
of $3,268,581 during the period from November 15, 2023 to December 31, 2023.
Non-Redemption Agreement
On November 13, 2023, we entered
into an agreement with (i) Meteora Capital Partners, LP ("MCP"), (ii) Meteora Select Trading Opportunities Master, LP ("MSTO"),
and (iii) Meteora Strategic Capital, LLC ("MSC" and, collectively with MCP and MSTO, "Backstop Investor") (the
"Non-Redemption Agreement") pursuant to which Backstop Investor agreed to reverse the redemption of 600,000 shares of our
Common Stock. Immediately upon consummation of the closing of the transactions contemplated by the MIPA, we paid the Backstop Investor,
in respect of the Backstop Investor Shares, an amount in cash equal to (x) the Backstop Investor Shares, multiplied by (y) the Redemption
Price (as defined in our then current-amended and restated certificate of incorporation) minus $5.00, or $3,567,960. We paid the Backstop
Investor a total of $6,017,960 in cash related to the Non-Redemption Agreement from proceeds of the Trust Account
Exchange Agreements
On November 13, 2023, we entered
into exchange agreements ("Exchange Agreements") with certain holders (the "Noteholders") of promissory notes
issued by us for working capital purposes which accrued interest at a rate of 15% per annum (the "Notes"). Pursuant to the
Exchange Agreements, we agreed to exchange, in consideration of the surrender and termination of the Notes in an aggregate principal amount
(including interest accrued thereon) of $2,257,771, for 451,563 shares of Common Stock at a price per share equal to $5.00 per share.
The Noteholders include JVS
Alpha Property, LLC, a company which is controlled by Joseph Salvucci, Jr., a member of our board of directors, Dante Caravaggio, a member
of our board of directors and our Chief Executive Officer, Byron Blount, a member of our board of directors, and Mitchell B. Trotter,
our Chief Financial Officer and a member of our board of directors.
The unaudited pro forma adjustments
are based on information currently available, assumptions, and estimates underlying the unaudited pro forma adjustments and are described
in the accompanying notes. Actual results may differ materially from the assumptions used to present the accompanying unaudited pro forma
combined financial information. Assumptions and estimates underlying the unaudited pro forma adjustments included in the unaudited pro
forma combined financial statements are described in the accompanying notes.
51
EON RESOURCES INC.
(F/K/A HNR ACQUISITION CORP)
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2023
EON Resources Inc.
November 15,
2023 to
December 31,
2023
POGO
Resources
LLC
January 1,
2023 to
November 14,
2023
Transaction
Accounting
Adjustments
Combined
Pro Forma
Revenue
Successor
Predecessor
Crude Oil
$
2,513,197
$
22,856,521
$
(1,350,074
)
A
$
24,019,644
Natural gas and natural gas liquids
70,918
809,553
(46,264
)
A
834,207
Gain (loss) on derivative instruments, net
340,808
51,957
392,765
Other revenue
50,738
520,451
—
571,189
Total revenue
2,975,661
24,238,482
(1,396,338
)
25,817,805
Expenses:
Production taxes, transportation and processing
226,062
2,117,800
(117,186
)
A
2,226,676
Lease operating
1,453,367
8,692,752
—
10,146,119
Depletion, depreciation and amortization
352,127
1,497,749
204,885
B
2,054,761
Accretion of asset retirement obligations
11,062
848,040
—
859,102
General and administrative
3,553,117
3,700,267
(193,332
)
C
7,060,052
Acquisition cost
9,999,860
—
(9,999,860
)
D
—
Total operating expenses
15,595,595
16,856,608
(10,105,492
)
22,346,711
Operating income (loss)
(12,619,934
)
7,381,874
(8,709,154
)
3,471,094
Other income (expense):
Net loss on asset sales and impairment
—
(816,011
)
—
(816,011
)
Change in fair value of warrant liability
187,704
—
—
187,704
Change in fair value of forward purchase agreement liability
3,268,581
—
—
3,268,581
Amortization of debt discount
(1,191,553
)
—
(364,439
)
E
(1,555,992
)
Interest expense
(1,043,312
)
(1,834,208
)
(4,165,792
)
(7,043,312
)
(4,200,000
)
F
(1,800,000
)
G
1,834,208
H
Interest income
6,736
313,401
(313,401
)
I
6,736
Other income (expense)
2,937
(74,193
)
—
(71,256
)
Total other income (expense)
1,231,093
(2,411,011
)
(4,843,632
)
(6,023,550
)
Income (loss) before income taxes
(11,388,841
)
4,970,863
3,865,522
(2,552,456
)
Income tax (expense) benefit
2,387,639
—
—
2,387,639
Net income (loss)
(9,001,202
)
4,970,863
3,865,522
(164,817
)
Net income (loss) attributable to noncontrolling interests
—
—
—
—
Net income (loss) attributable to EON Resources Inc.
$
(9,001,202
)
$
4,970,863
$
3,865,522
$
(164,817
)
Weighted Average shares outstanding, Class A common stock – basic and diluted
5,235,131
5,235,131
Net income (loss) per share of Class A common stock – basic and diluted
$
(1.72
)
$
(0.03
)
52
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL
STATEMENT
1. Basis of Presentation
The Purchase was accounted
for as a business combination under ASC 805. The purchase price of the Pogo Business has been allocated to the assets acquired and liabilities
assumed based on their estimated relative fair values as follows: Pogo was deemed to be the predecessor entity of the Company. Accordingly,
the historical financial statements of Pogo became the historical financial statements of the Company, upon the consummation of the Purchase.
Under the acquisition method of accounting, the assets and liabilities of Pogo were recorded at their fair values measured as of the acquisition
date.
The unaudited pro forma combined
statement of operations for the year ended December 31, 2023, reflects pro forma effect to the Purchase as if it had been completed
on January 1, 2023.
Management has made significant
estimates and assumptions in its determination of the pro forma adjustments. As the unaudited pro forma combined financial information
has been prepared based on these preliminary estimates, the final amounts recorded may differ materially from the information presented.
The unaudited pro forma combined financial information does not give effect to any anticipated synergies, operating efficiencies, tax
savings, or cost savings that may be associated with the Purchase.
The pro forma adjustments
reflecting the consummation of the Purchase are based on certain currently available information and certain assumptions and methodologies
that we believe are reasonable under the circumstances. The unaudited pro forma adjustments, which are described in the accompanying notes,
may be revised as additional information becomes available and is evaluated. Therefore, it is likely that the actual adjustments will
differ from the pro forma adjustments and it is possible the difference may be material. EON believes that its assumptions and methodologies
provide a reasonable basis for presenting all of the significant effects of the Purchase based on information available to management
at the time and that the pro forma adjustments give appropriate effect to those assumptions and are properly applied in the unaudited
pro forma combined financial information.
The unaudited pro forma combined
financial information is not necessarily indicative of what the actual results of operations and financial position would have been had
the Purchase taken place on the dates indicated, nor are they indicative of the future consolidated results of operations or financial
position of the combined company. They should be read in conjunction with the historical financial statements and notes thereto of EON's
Form 10-K included in this prospectus.
The following unaudited pro
forma combined financial information has been prepared in accordance with Article 11 of Regulation S-X, as amended by the
final rule, Release No. 33-10786 "Amendments to Financial Disclosures about Acquired and Disposed Businesses."
Release No. 33-10786 replaces the existing pro forma adjustment criteria with simplified requirements to depict the accounting
for the Purchase ("Transaction Accounting Adjustments") and present the reasonably estimable synergies and other transaction
effects that have occurred or are reasonably expected to occur ("Management's Adjustments"). EON has elected not to
present Management's Adjustments and will only be presenting Transaction Accounting Adjustments in the following unaudited pro forma
combined financial information.
2. Accounting Policies
Upon consummation of the Purchase,
management performed a comprehensive review of the accounting policies of the two entities. Based on its initial analysis, management
did not identify any differences that would have a material impact on the unaudited pro forma combined financial information. As a result,
the unaudited pro forma combined financial information does not assume any differences in accounting policies.
53
3. Purchase Price Allocation
The Acquisition was accounted
for as a business combination under ASC 805. The purchase price of the Pogo Business has been allocated to the assets acquired and liabilities
assumed based on their estimated relative fair values as follows:
Purchase Price:
Cash
$
31,074,127
Side Letter payable
1,925,873
Promissory note to Sellers of Pogo Business
15,000,000
10,000 EON Class A Common shares for Option Agreement
67,700
200,000 EON Class A Common shares
1,354,000
1,800,000 OpCo Class B Units
12,186,000
1,500,000 OpCo Preferred Units
21,220,594
Total purchase consideration
$
82,828,294
Purchase Price Allocation
Cash
$
246,323
Accounts receivable
3,986,559
Prepaid expenses
368,371
Oil & gas reserves
93,809,392
Derivative assets
51,907
Accounts payable
(2,290,475
)
Accrued liabilities and other
(1,244,633
)
Revenue and royalties payable
(775,154
)
Revenue and royalties payable, related parties
(1,199,420
)
Short-term derivative liabilities
(27,569
)
Deferred tax liabilities
(8,528,772
)
Asset retirement obligations, net
(893,235
)
Other liabilities
(675,000
)
Net assets acquired
$
82,828,294
The fair value of the Class
A common shares is based on the closing price of the Company's common stock at November 15, 2023, which was $6.77. The fair value
of the OpCo Class B Units is based on the equivalent of 1,800,000 shares of Class A common stock and the same closing price. The fair
value of the OpCo Preferred Units was estimated based on the present value of the maximum Stated Conversion Value of 1,500,000 units over
the two-year period using a weighted average cost of capital.
4. Adjustments to Unaudited Pro forma combined
Financial Information
The unaudited pro forma combined
financial information has been prepared to illustrate the effect of the Purchase and has been prepared for informational purposes only.
The pro forma combined provision for income taxes does not necessarily reflect the amounts that would have resulted had the combined company
filed consolidated income tax returns during the periods presented.
The pro forma adjustments
included in the unaudited pro forma combined statement of operations for the year ended December 31, 2023, are as follows:
(A)
Reflects the reduction of the historical results of operations of POGO for the impact of the 10% overriding royalty interest in the acquired properties not acquired by the Company.
(B)
Reflects the adjustment to depletion, depreciation and amortization for the estimated new basis of property plant and equipment and oil and gas reserves as a result of the preliminary purchase price allocation.
54
(C)
Reflects the adjustment to include $830,000 of annual salary of the Company's officers beginning after closing of the MIPA for three officers, pursuant to the Company's compensation plan. This adjustment also includes the estimate of $553,333 in expense related to one year of vesting of the RSU grants to those officers that pursuant to the Company's compensation plan. This adjustment also includes removing $1,500,000 of expense for the shares of Class A common stock  issued to White Lion at closing of the MIPA in connect with the Common Stock Purchase Agreement due to the fee being non-recurring and $360,000 of consulting fees payable and $609,300 of expense related to vesting of restricted stock grants to the Company's President and an entity controlled by the Company's Chairman pursuant to their consulting agreements entered into in February 2023, effective November 15, 2023
(D)
To remove the impact of non-recurring acquisition costs
(E)
To recognizing a full year of amortization of deferred finance costs associated with the senior secured Term Loan
(F)
Reflects one year of interest expense on the Senior Secured Term Loan The Senior Secured Term Loan bears interest at 15.0% per annum
(G)
Reflects a full year of interest expense related to the issuance of the Seller Promissory Note. The Seller Promissory Note bear interests at 12% per annum.
(H)
Reflects the reversal of historical interest expense of Pogo.
(I)
Reflects the reversal of interest income earned on marketable securities held in the Trust Account.
4. Pro Forma Earnings per Share
Basic earnings per share is
computed based on the historical weighted average number of shares of common stock outstanding during the period, and the issuance of
additional shares in connection with the Purchase, assuming the shares were outstanding since January 1, 2023. As the Purchase is
being reflected as if it had occurred at the beginning of the period presented, the calculation of weighted average shares outstanding
for basic and diluted net loss per share assumes that the shares issuable in connection with the Purchase have been outstanding for the
entire period presented. If the maximum number of Public Shares are redeemed, this calculation is retroactively adjusted to eliminate
such shares for the entire period presented. Diluted earnings per share is computed based on the weighted average number of shares of
common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method.
For the Year Ended December 31, 2023
Pro Forma
Combined
Pro forma net loss attributable to Class A common stockholders
$
(164,817
)
Pro forma net loss per share attributable to Class A common stockholders, basic and diluted
$
(0.03
)
Weighted average shares outstanding, basic and diluted
5,235,131
Excluded Securities
(1)
Public Warrants
8,625,000
Private Placement Warrants
505,000
Private Warrants
5,434,000
(1)
The potentially dilutive outstanding securities were excluded from the computation of pro forma net income per share, basic and diluted, because their effect would have been anti-dilutive, due to the exercise price of the Public Warrants, Private Placement and Private Warrants being greater that the average market price of the Company's common stock.
55
BUSINESS OF EON
Overview
EON Resources Inc. (f/k/a
HNR Acquisition Corp), was incorporated in Delaware as a blank check company formed for the purpose of effecting a merger, capital stock
exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses or entities. Prior
to closing the Purchase, our efforts were limited to organizational activities, completion of an initial public offering and the evaluation
of possible business combinations. On February 15, 2022, we consummated the Initial Public Offering of 7,500,000 units (the "Units"),
at $10.00 per Unit, generating proceeds of $75,000,000. Additionally, the underwriter fully exercised its option to purchase 1,125,000
additional Units, for which we received cash proceeds of $11,250,000. Simultaneously with the closing of the Initial Public Offering,
we consummated the sale of 505,000 private placement units at a price of $10.00 per unit generating proceeds of $5,050,000 in a private
placement to our Sponsor and EF Hutton (formerly Kingswood Capital Markets) ("EF Hutton"). On April 4, 2022, the Units separated
into Class A Common Stock and warrants, and ceased trading. On April 4, 2022, the Class A Common Stock and warrants commenced trading
on the NYSE American.
We identified Pogo as the
initial target for our initial business combination, and we closed on the acquisition of Pogo on November 15, 2023. While we were permitted
to pursue an acquisition opportunity in any industry or sector, we focused on assets used in exploring, developing, producing, transporting,
storing, gathering, processing, fractionating, refining, distributing or marketing of natural gas, natural gas liquids, crude oil or refined
products in North America.
On September 16, 2024, we
filed a Certificate of Amendment to our Amended and Restated Certificate of Incorporation with the Secretary of State of the State of
Delaware to change our name from "HNR Acquisition Corp" to "EON Resources Inc.", effective at 11:59PM on September
17, 2024. Following the change of our name from HNR Acquisition Corp to EON Resources Inc., effective at the beginning of trading on September
18, 2024, our Class A Common Stock began trading on the NYSE American under the symbol "EONR" and our Public Warrants began
trading on the NYSE American under the symbol "EONR WS". The CUSIP numbers for the Company's Class A Common Stock and
Public Warrants did not change.
Purchase
On December 27, 2022,
we, entered into a Membership Interest Purchase Agreement (the "Original MIPA") with CIC Pogo LP, a Delaware limited partnership
("CIC"), DenCo Resources, LLC, a Texas limited liability company ("DenCo"), Pogo Resources Management, LLC, a
Texas limited liability company ("Pogo Management"), 4400 Holdings, LLC, a Texas limited liability company ("4400"
and, together with CIC, DenCo and Pogo Management, collectively, "Seller" and each a "Seller"), and, solely with
respect to Section 7.20 of the Original MIPA, HNRAC Sponsors LLC, a Delaware limited liability company ("Sponsor"). On
August 28, 2023, we, HNRA Upstream, LLC, a newly formed Delaware limited liability company which is managed by us, and is a subsidiary
of ours ("OpCo"), and HNRA Partner, Inc., a newly formed Delaware corporation and wholly owned subsidiary of ours ("SPAC
Subsidiary", and together with us and OpCo, "Buyer" and each a "Buyer"), entered into an Amended and Restated
Membership Interest Purchase Agreement (the "A&R MIPA") with Seller, and, solely with respect to Section 6.20 of
the A&R MIPA, the Sponsor, which amended and restated the Original MIPA in its entirety (as amended and restated, the "MIPA").
Our stockholders approved the transactions contemplated by the MIPA at a special meeting of stockholders that was originally convened
October 30, 2023, adjourned, and then reconvened on November 13, 2023 (the "Special Meeting").
On November 15, 2023 (the
"Closing Date"), as contemplated by the MIPA:
●
We
filed a Second Amended and Restated Certificate of Incorporation (the "Second A&R Charter") with the Secretary of State
of the State of Delaware, pursuant to which the number of authorized shares of our capital stock, par value $0.0001 per share, was increased
to 121,000,000 shares, consisting of (i) 100,000,000 shares of Class A Common Stock, (ii) 20,000,000 shares of Class B Common Stock,
and (iii) 1,000,000 shares of preferred stock, par value $0.0001 per share;
●
Our
shares of common stock were reclassified as Class A Common Stock; the Class B Common Stock has no economic rights but entitles its holder
to one vote on all matters to be voted on by stockholders generally; holders of shares of Class A Common Stock and shares of Class B
Common Stock will vote together as a single class on all matters presented to our stockholders for their vote or approval, except as
otherwise required by applicable law or by the Second A&R Charter;
●
(A)
We contributed to OpCo (i) all of our assets (excluding our interests in OpCo and the aggregate amount of cash required to satisfy any
exercise by our stockholders of their Redemption Rights (as defined below)) and (ii) 2,000,000 newly issued shares of Class B Common
Stock (such shares, the "Seller Class B Shares") and (B) in exchange therefor, OpCo issued to us a number of Class A common
units of OpCo (the "OpCo Class A Units") equal to the number of total shares of Class A Common Stock issued and outstanding
immediately after the closing (the "Closing") of the transactions contemplated by the MIPA (following the exercise by our
stockholders of their Redemption Rights) (such transactions, the "SPAC Contribution"); and
56
●
Immediately
following the SPAC Contribution, OpCo contributed $900,000 to SPAC Subsidiary in exchange for 100% of the outstanding common stock of
SPAC Subsidiary (the "SPAC Subsidiary Contribution");
●
Immediately
following the SPAC Subsidiary Contribution, Seller sold, contributed, assigned, and conveyed to (A) OpCo, and OpCo acquired and accepted
from Seller, ninety-nine percent (99.0%) of the outstanding membership interests of Pogo Resources, LLC, a Texas limited liability
company ("Pogo" or the "Target"), and (B) SPAC Subsidiary, and SPAC Subsidiary purchased and accepted from Seller,
one percent (1.0%) of the outstanding membership interest of Target (together with the ninety-nine percent (99.0%) interest, the "Target
Interests"), in each case, in exchange for (x) $900,000 of the Cash Consideration (as defined below) in the case of SPAC Subsidiary
and (y) the remainder of the Aggregate Consideration (as defined below) in the case of OpCo (such transactions, together with the SPAC
Contribution and SPAC Subsidiary Contribution and the other transactions contemplated by the MIPA, the "Purchase").
The "Aggregate Consideration"
for the Target Interests was: (a) cash in the amount of $31,074,127 in immediately available funds (the "Cash Consideration"),
(b) 2,000,000 Class B common units of OpCo ("OpCo Class B Units") valued at $10.00 per unit (the "Common Unit Consideration"),
which will be equal to and exchangeable into 2,000,000 shares of Class A Common Stock issuable upon exercise of the OpCo Exchange Right
(as defined below), as reflected in the amended and restated limited liability company agreement of OpCo that became effective at Closing
(the "A&R OpCo LLC Agreement"), (c) the Seller Class B Shares, (d) $15,000,000 payable through a promissory note to Seller
(the "Seller Promissory Note"), (e) 1,500,000 preferred units (the "OpCo Preferred Units" and together with the
Opco Class A Units and the OpCo Class B Units, the "OpCo Units") of OpCo (the "Preferred Unit Consideration",
and, together with the Common Unit Consideration, the "Unit Consideration"), and (f) an agreement for Buyer, on or before
November 21, 2023, to settle and pay to Seller $1,925,873 from sales proceeds received from oil and gas production attributable to Pogo,
including pursuant to its third party contract with affiliates of Chevron. At Closing, 500,000 Seller Class B Shares (the "Escrowed
Share Consideration") were placed in escrow for the benefit of Buyer pursuant to an escrow agreement and the indemnity provisions
in the MIPA. The Aggregate Consideration is subject to adjustment in accordance with the MIPA.
In connection with the Purchase,
holders of 3,323,707 shares of common stock sold in our initial public offering (the "public shares") properly exercised their
right to have their public shares redeemed (the "Redemption Rights") for a pro rata portion of the trust account (the "Trust
Account") which held the proceeds from our initial public offering, funds from our payments to extend the time to consummate a business
combination and interest earned, calculated as of two business days prior to the Closing, which was approximately $10.95 per share, or
$49,362,479 in the aggregate. The remaining balance in the Trust Account (after giving effect to the Redemption Rights) was $12,979,300.
Immediately upon the Closing,
Pogo Royalty exercised the OpCo Exchange Right as it relates to 200,000 OpCo Class B units (and 200,000 shares of Class B Common Stock).
After giving effect to the Purchase, the redemption of public shares as described above and the exchange mentioned in the preceding sentence,
were (i) 5,097,009 shares of Class A Common Stock issued and outstanding, (ii) 1,800,000 shares of Class B Common Stock issued and outstanding
and (iii) no shares of preferred stock issued and outstanding.
First Amendment to Amended and Restated Membership
Interest Purchase Agreement
On November 15, 2023, Buyer,
Seller, and Sponsor entered into the MIPA Amendment, whereby the Parties agreed to extend the outside date for the transaction to November
30, 2023, and to place 500,000 shares of Seller Class B Shares into escrow instead of 500,000 OpCo Class B Units.
Settlement and Release Agreement
Effective June 20, 2024, the
Company and the Seller entered into a settlement agreement and release. Under the settlement agreement and release, and in settlement
of the working capital provisions of the Amended MIPA, the Seller agreed to waive all rights and claims to the amount of royalties payable
under the ORRI as of December 31, 2023, totaling $1,523,138 and agreed to pay certain amounts related to vendor payable claims assumed
by the Company at Closing.
57
Settle Up Letter Agreement
On November 15, 2023, Buyer
and Seller entered into the Settle Up Letter Agreement, whereby Seller agreed to accept a minimum amount of cash at Closing less than
$33,000,000, provided that, on or before November 21, 2023, Buyer must settle and pay to Seller $1,925,873 from sales proceeds received
from oil and gas production attributable to Pogo, including pursuant to its third party contract with affiliates of Chevron. As of June
30, 2024, Buyer still owed $645,872.76 to Seller; however, Seller waived any continuing default under the terms of the MIPA based on lack
of payment, provided that such waiver is not a release of Buyer's obligation to pay the amount in full.
OpCo A&R LLC Agreement
In connection with the Closing,
we and Pogo Royalty, LLC, a Texas limited liability company, an affiliate of Seller and Seller's designated recipient of the Aggregate
Consideration ("Pogo Royalty"), entered into an amended and restated limited liability company agreement of OpCo (the "OpCo
A&R LLC Agreement"). Pursuant to the A&R OpCo LLC Agreement, each OpCo unitholder (excluding us) will, subject to certain
timing procedures and other conditions set forth therein, have the right (the "OpCo Exchange Right") to exchange all or a
portion of its OpCo Class B Units for, at OpCo's election, (i) shares of Class A Common Stock at an exchange
ratio of one share of Class A Common Stock for each OpCo Class B Unit exchanged, subject to conversion rate adjustments for
stock splits, stock dividends and reclassifications and other similar transactions, or (ii) an equivalent amount of cash. Additionally,
the holders of OpCo Class B Units will be required to exchange all of their OpCo Class B Units (a "Mandatory
Exchange") upon the occurrence of the following: (i) upon our direction, with the consent of at least fifty percent (50%) of
the holders of OpCo Class B Units; or (ii) upon the one-year anniversary of the Mandatory Conversion Trigger Date. In connection
with any exchange of OpCo Class B Units pursuant to the OpCo Exchange Right or acquisition of OpCo Class B Units pursuant
to a Mandatory Exchange, a corresponding number of shares of Class B Common Stock held by the relevant OpCo unitholder will be cancelled.
The OpCo Preferred Units will
be automatically converted into OpCo Class B Units on the two-year anniversary of the issuance date of such OpCo Preferred
Units (the "Mandatory Conversion Trigger Date") at a rate determined by dividing (i) $20.00 per unit (the "Stated
Conversion Value"), by (ii) the Market Price of the Class A Common Stock (the "Conversion Price"). The "Market
Price" means the simple average of the daily VWAP of the Class A Common Stock during the five (5) trading days prior to
the date of conversion. On the Mandatory Conversion Trigger Date, we will issue a number of shares of Class B Common Stock to Pogo
Royalty equivalent to the number of OpCo Class B Units issued to Pogo Royalty. If not exchanged sooner, such newly issued OpCo
Class B Units shall automatically exchange into Class A Common Stock on the one-year anniversary of the Mandatory
Conversion Trigger Date at a ratio of one OpCo Class B Unit for one share of Class Common Stock. An equivalent number of shares
of Class B Common Stock must be surrendered with the OpCo Class B Units to us in exchange for the Class A Common Stock.
As noted above, the OpCo Class B Units must be exchanged upon the one-year anniversary of the Mandatory Conversion Trigger Date.
Promissory Note
In connection with the Closing,
OpCo issued the Seller Promissory Note to Pogo Royalty in the principal amount of $15,000,000. The Seller Promissory Note provides
for a maturity date that is six (6) months from the Closing Date, bears an interest rate equal 12% per annum, and contains no penalty
for prepayment. If the Seller Promissory Note is not repaid in full on or prior to its stated maturity date, OpCo will owe interest from
and after default equal to the lesser of 18% per annum and the highest amount permissible under law, compounded monthly. The Seller Promissory
Note is subordinated to the Term Loan (as defined herein).
Registration Rights Agreement
In connection with the Closing,
we and Pogo Royalty entered into a Registration Rights Agreement (the "Registration Rights Agreement"), pursuant to which
we agreed to provide Pogo Royalty with certain registration rights with respect to the shares of Class A Common Stock issuable upon exercise
of the OpCo Exchange Right, including filing with the SEC an initial registration statement on Form S-1 covering the resale
by the Pogo Royalty of the shares of Class A Common Stock issuable upon exercise of the OpCo Exchange Right so as to permit their resale
under Rule 415 under the Securities Act, no later than thirty (30) days following the Closing, use its commercially reasonable
efforts to have the initial registration statement declared effective by the SEC as soon as reasonably practicable following the filing
thereof with the SEC, and use commercially reasonable efforts to convert the Form S-1 (and any subsequent registration statement)
to a shelf registration statement on Form S-3 as promptly as practicable after we are is eligible to use a Form S-3 Shelf.
58
In certain circumstances,
Pogo Royalty can demand our assistance with underwritten offerings, and Pogo Royalty will be entitled to certain piggyback registration
rights.
We filed a registration statement
on Form S-1 (File No. 333-275378) that became effective on August 9, 2024, which registered for resale up to Pogo Royalty's shares
of Class A Common Stock and shares of Class A Common Stock underlying the Class B Common Stock.
Option Agreement
In connection with the Closing,
we, HNRA Royalties, LLC, a Delaware limited liability company and wholly-owned subsidiary of ours ("HNRA Royalties") and Pogo
Royalty entered into an Option Agreement (the "Option Agreement"). Pogo Royalty owns certain overriding royalty interests
in certain oil and gas assets owned by Pogo (the "ORR Interest"). Pursuant to the Option Agreement, Pogo Royalty granted irrevocable
and exclusive option to HNRA Royalties to purchase the ORR Interest for the Option Price (as defined below) at any time prior to November
15, 2024. The option is not exercisable while the Seller Promissory Note is outstanding.
The purchase price for the
ORR Interest upon exercise of the option is: (i) (1) $30,000,000 the ("Base Option Price"), plus (2) an additional
amount equal to annual interest on the Base Option Price of twelve percent (12%), compounded monthly, from the Closing Date through the
date of acquisition of the ORR Interest, minus (ii) any amounts received by Pogo Royalty in respect of the ORR Interest from the
month of production in which the effective date of the Option Agreement occurs through the date of the exercise of the option (such aggregate
purchase price, the "Option Price").
The Option Agreement and the
option will immediately terminate upon the earlier of (a) Pogo Royalty's transfer or assignment of all of the ORR Interest
in accordance with the Option Agreement and (b) November 15, 2024.
Pursuant to the Option Agreement,
upon execution, we issued to Pogo Royalty 10,000 shares of Class A Common Stock.
Director Nomination and Board Observer Agreement
In connection with the Closing,
we entered into Director Nomination and Board Observer Agreement (the "Board Designation Agreement") with CIC. Pursuant to
the Board Designation Agreement, CIC has the right, at any time CIC beneficially owns our capital stock, to appoint two board observers
to attend all meetings of our Board of Directors. In addition, after the time of the conversion of the OpCo Preferred Units owned
by Pogo Royalty, CIC will have the right to nominate a certain number of members of the board of directors depending on Pogo Royalty's
ownership percentage of Class A Common Stock as further provided in the Board Designation Agreement.
Backstop Agreement
In connection with the Closing,
we entered a Backstop Agreement (the "Backstop Agreement") with Pogo Royalty and certain of our founders listed therein (the
"Founders") whereby Pogo Royalty will have the right ("Put Right") to cause the Founders to purchase Pogo Royalty's
OpCo Preferred Units at a purchase price per unit equal to $10.00 per unit plus the product of (i) the number of days elapsed
since the effective date of the Backstop Agreement and (ii) $10.00 divided by 730. Seller's right to exercise the Put Right
will survive for six (6) months following the date the Trust Shares (as defined below) are not restricted from transfer under the
Letter Agreement (as defined in the MIPA) (the "Lockup Expiration Date").
As security that the Founders
will be able to purchase the OpCo Preferred Units upon exercise of the Put Right, the Founders agreed to place at least 1,300,000 shares
of Class A Common Stock into escrow (the "Trust Shares"), which the Founders can sell or borrow against to meet their
obligations upon exercise of the Put Right, with the prior consent of Seller. We are not obligated to purchase the OpCo Preferred Units from
Pogo Royalty under the Backstop Agreement. Until the Backstop Agreement is terminated, Pogo Royalty and its affiliates are not permitted
to engage in any transaction which is designed to sell short the Class A Common Stock or any of our other publicly traded securities.
59
Founder Pledge Agreement
In connection with the Closing,
we entered a Founder Pledge Agreement (the "
Founder Pledge Agreement
") with the Founders whereby, in consideration
of placing the Trust Shares into escrow and entering into the Backstop Agreement, we agreed: (a) by January 15, 2024, to issue to the
Founders an aggregate number of newly issued shares of Class A Common Stock equal to 10% of the number of Trust Shares; (b) by January
15, 2024, to issue to the Founders a number of warrants to purchase an aggregate number of shares of Class A Common Stock equal to 10%
of the number of Trust Shares, which such warrants shall be exercisable for five years from issuance at an exercise price of $11.50 per
shares; (c) if the Backstop Agreement is not terminated prior to the Lockup Expiration Date, to issue an aggregate number of newly issued
shares of Class A Common Stock equal to (i) (A) the number of Trust Shares,
divided by
(B) the simple average of the daily VWAP
of the Class A Common Stock during the five (5) Trading Days prior to the date of the termination of the Backstop Agreement, subject to
a minimum of $6.50 per share,
multiplied by
(C) a price between $10.00-$13.00 per share (as further described in the Founder Pledge
Agreement),
minus
(ii) the number of Trust Shares; and (d) following the purchase of OpCo Preferred Units by a Founder pursuant
to the Put Right, to issue a number of newly issued shares of Class A Common Stock equal to the number of Trust Shares sold by such Founder.
Until the Founder Pledge Agreement is terminated, the Founders are not permitted to engage in any transaction which is designed to sell
short the Class A Common Stock or any of our other publicly traded securities.
Financing at Closing
On November 2, 2023, we entered
into an agreement with (i) Meteora Capital Partners, LP ("MCP"), (ii) Meteora Select Trading Opportunities Master, LP ("MSTO"),
and (iii) Meteora Strategic Capital, LLC ("MSC" and, collectively with MCP and MSTO, "FPA Seller") (the "Forward
Purchase Agreement") for OTC Equity Prepaid Forward Transactions. For purposes of the Forward Purchase Agreement, we are referred
to as the "Counterparty". Capitalized terms used herein but not otherwise defined shall have the meanings ascribed to such
terms in the Forward Purchase Agreement. The purpose of our entering into this agreement and these transactions was to provide a mechanism
whereby FPA Seller would purchase, and waive their redemption rights with respect to, a sufficient number of shares of our common stock
to enable us to have at least $5,000,000 of net tangible assets, a non-waivable condition to the Closing of the Purchase, to provide the
Company with cash to meet a portion of the transaction costs associated with the Purchase, and to provide the Company with a mechanism
to raise cash in the future at maturity. As of the date of this prospectus, however, the Company has not made any issuances, and has not
received any proceeds, from Meteora pursuant to the Forward Purchase Agreement, and the Company is actively pursuing a mutual recission
of the Forward Purchase Agreement.
The Forward Purchase Agreement
provides for a prepayment shortfall in an amount in U.S. dollars equal to 0.50% of the product of the Recycled Shares and the Initial
Price (defined below). FPA Seller in its sole discretion may sell Recycled Shares (i) at any time following November 2, 2023 (the "Trade
Date") at prices greater than the Reset Price or (ii) commencing on the 180th day following the Trade Date at any sales price, in
either case without payment by FPA Seller of any Early Termination Obligation until such time as the proceeds from such sales equal 100%
of the Prepayment Shortfall (as set forth under the section entitled "Shortfall Sales" in the Forward Purchase Agreement)
(such sales, "Shortfall Sales," and such Shares, "Shortfall Sale Shares"). A sale of Shares is only (a) a "Shortfall
Sale," subject to the terms and conditions herein applicable to Shortfall Sale Shares, when a Shortfall Sale Notice is delivered
under the Forward Purchase Agreement, and (b) an Optional Early Termination, subject to the terms and conditions of the Forward Purchase
Agreement applicable to Terminated Shares, when an OET Notice is delivered under the Forward Purchase Agreement, in each case the delivery
of such notice in the sole discretion of the FPA Seller (as further described in the "Optional Early Termination" and "Shortfall
Sales" sections in the Forward Purchase Agreement).
Following the Closing, the
reset price (the "Reset Price") will be $10.00; provided that the Reset Price shall be reduced pursuant to a Dilutive Offering
Reset immediately upon the occurrence of such Dilutive Offering. The Purchased Amount subject to the Forward Purchase Agreement shall
be increased upon the occurrence of a Dilutive Offering Reset to that number of Shares equal to the quotient of (i) the Purchased Amount
divided by (ii) the quotient of (a) the price of such Dilutive Offering divided by (b) $10.00.
From time to time and on any
date following the Trade Date (any such date, an "OET Date") and subject to the terms and conditions in the Forward Purchase
Agreement, FPA Seller may, in its absolute discretion, terminate the Transaction in whole or in part by providing written notice to Counterparty
(the "OET Notice"), by the later of (a) the fifth Local Business Day following the OET Date and (b) no later than the next
Payment Date following the OET Date, (which shall specify the quantity by which the Number of Shares shall be reduced (such quantity,
the "Terminated Shares")). The effect of an OET Notice shall be to reduce the Number of Shares by the number of Terminated
Shares specified in such OET Notice with effect as of the related OET Date. As of each OET Date, Counterparty shall be entitled to an
amount from FPA Seller, and the FPA Seller shall pay to Counterparty an amount, equal to the product of (x) the number of Terminated Shares
and (y) the Reset Price in respect of such OET Date. The payment date may be changed within a quarter at the mutual agreement of the parties.
60
The "Valuation Date"
will be the earlier to occur of (a) the date that is three (3) years after the date of the closing of the Purchase & Sale (the date
of the closing of the Purchase & Sale, the "Closing Date") pursuant to the A&R MIPA, (b) the date specified by FPA
Seller in a written notice to be delivered to Counterparty at FPA Seller's discretion (which Valuation Date shall not be earlier
than the day such notice is effective) after the occurrence of any of (w) a VWAP Trigger Event, (x) a Delisting Event, (y) a Registration
Failure or (z) unless otherwise specified therein, upon any Additional Termination Event, and (c) the date specified by FPA Seller in
a written notice to be delivered to Counterparty at FPA Seller's sole discretion (which Valuation Date shall not be earlier than
the day such notice is effective). The Valuation Date notice will become effective immediately upon its delivery from FPA Seller to Counterparty
in accordance with the Forward Share Purchase Agreement.
On the "Cash Settlement
Payment Date," which is the tenth Local Business Day immediately following the last day of the Valuation Period, the FPA Seller
will remit to the Counterparty an amount equal to the Settlement Amount and will not otherwise be required to return to the Counterparty
any of the Prepayment Amount and the Counterparty shall remit to the FPA Seller the Settlement Amount Adjustment; provided, that if the
Settlement Amount less the Settlement Amount Adjustment is a negative number and either clause (x) of Settlement Amount Adjustment applies
or the Counterparty has elected pursuant to clause (y) of Settlement Amount Adjustment to pay the Settlement Amount Adjustment in cash,
then neither the FPA Seller nor the Counterparty shall be liable to the other party for any payment under the Cash Settlement Payment
Date section of the Forward Purchase Agreement.
The FPA Seller agreed to waive
any redemption rights with respect to any Recycled Shares in connection with the Closing, as well as any redemption rights under the Company's
certificate of incorporation that would require redemption by the Company.
The purpose of our entering
into this agreement and these transactions was to provide a mechanism whereby FPA Seller would purchase, and waive their redemption rights
with respect to, a sufficient number of shares of our common stock to enable us to have at least $5,000,000 of net tangible assets, a
non-waivable condition to the Closing of the Purchase, to provide the Company with cash to meet a portion of the transaction costs associated
with the Purchase, and to provide the Company with a mechanism to raise cash in the future at maturity. As of the date of this prospectus,
however, the Company has not made any issuances, and has not received any proceeds, from Meteora pursuant to the Forward Purchase Agreement,
and the Company is actively pursuing a mutual recission of the Forward Purchase Agreement.
Pursuant to the Forward Purchase
Agreement, the FPA Seller obtained 50,070 shares ("Recycled Shares") and such purchase price of $545,356, or $10.95 per
share, was funded by the use of our trust account proceeds as a partial prepayment ("Prepayment Amount"), and the FPA
Seller may purchase an additional 504,425 additional shares under the Forward Purchase Agreement, for the Forward Purchase Agreement
redemption 3 years from the date of the Acquisition ("Maturity Date").
The FPA Seller received an
additional $1,004,736 in cash from the Trust Account related to reimbursement for 90,000 shares of Class A Common stock
purchased by the FPA Seller in connection with the transactions at the redemption price of $10.95 per share and transaction fees.
The Maturity Date may be accelerated,
at the FPA Sellers' discretion, if the Company share price trades below $3.00 per share for any 10 trading days during
a 30-day consecutive trading-day period or the Company is delisted. The Company's common stock traded below minimum trading
price during the period from November 15, 2023 to December 31, 2023, but no acceleration of the Maturity Date has been executed by the
FPA Seller to date.
FPA Funding Amount PIPE Subscription Agreements
On November 2, 2023, we entered
into a subscription agreement (the "FPA Funding Amount PIPE Subscription Agreement") with FPA Seller.
Pursuant to the FPA Funding
PIPE Subscription Agreement, FPA Seller agreed to subscribe for and purchase, and we agreed to issue and sell to FPA Seller, on the Closing
Date, an aggregate of up to 3,000,000 our shares of Common Stock, less the Recycled Shares in connection with the Forward Purchase Agreement.
The fair value of the prepayment
was $14,257,648 at inception of the agreement, $6,066,324 as of the Closing date and was $6,067,094 as of December 31,
2023, and is included as a reduction of additional paid-in capital on the consolidated statement of stockholders' equity. The estimated
fair value of the Maturity Consideration is $1,704,416. The Company recognized a gain from the change in fair value of the Forward Purchase
Agreement of $3,268,581 during the period from November 15, 2023 to December 31, 2023.
61
Non-Redemption Agreement
On November 13, 2023, we entered
into an agreement with (i) Meteora Capital Partners, LP ("MCP"), (ii) Meteora Select Trading Opportunities Master, LP ("MSTO"),
and (iii) Meteora Strategic Capital, LLC ("MSC" and, collectively with MCP and MSTO, "Backstop Investor") (the
"Non-Redemption Agreement") pursuant to which Backstop Investor agreed to reverse the redemption of up to the lesser of (i)
600,000 shares of Class A Common Stock, and (ii) such number of shares of Class A Common Stock such that the number of shares beneficially
owned by Backstop Investor and its affiliates and any other persons whose beneficial ownership of Class A Common Stock would be aggregated
with those of Backstop Investor for purposes of Section 13(d) of the Exchange Act, does not exceed 9.99% of the total number of issued
and outstanding shares of Common Stock (such number of shares, the "Backstop Investor Shares").
Immediately upon consummation
of the closing of the transactions contemplated by the MIPA (the "Closing"), we paid Backstop Investor, in respect of the
Backstop Investor Shares, an amount in cash equal to (x) the Backstop Investor Shares, multiplied by (y) the Redemption Price (as defined
in our then-current amended and restated certificate of incorporation) minus $5.00, or $3,567,960. The Company paid the Backstop Investor
a total of $6,017,960 in cash related to the Non-Redemption Agreement from proceeds of the Trust Account.
Pogo Overview
Pogo is an exploration and
production company that began operations in February 2017. Pogo is based in Dallas, Texas, and a field office in Loco Hills, New
Mexico. As of December 31, 2023, Pogo's operating focus is the Northwest Shelf of the Permian Basin, with a specific emphasis
on oil and gas producing properties located in the Grayburg-Jackson Field in Eddy County, New Mexico. Pogo is the Operator of Record
of its oil and gas properties, operating its properties through its wholly owned subsidiary, LH Operating LLC. Pogo completed multiple
acquisitions in 2018 and 2019. These acquisitions included multiple producing properties in Lea and Eddy counties, New Mexico. In
2020, after identifying its core development property, Pogo successfully completed a series of divestures of its non-core properties.
Then, with one key asset, its Grayburg-Jackson Field in Eddy County, New Mexico, Pogo focused all of its efforts on developing this
asset. This has been Pogo's focus for 2022 and 2023. Currently, Pogo and EON combined have 15 employees (5 executive officers where
4 are in Houston and 1 in Lubbock; 10 field staff in Loco Hills). From time to time, on an as needed basis, contract workers handle additional
necessary responsibilities.
Pogo owns, manages, and operates,
through its wholly owned subsidiary, LH Operating, LLC, 100% working interest in a gross 13,700 acres located on the Northwest Shelf of
the prolific oil and gas producing Permian Basin. Pogo benefits from cash flow growth through continued development of its working interest's
ownership, with relatively low capital cost and lease operating expenses. As of December 31, 2023, average net daily production associated
with Pogo's working interests was 1,022 barrel of oil equivalent ("BOE") per day consisting of 94% oil and 6% natural
gas. Pogo expects to continue to grow its cash flow by production enhancements in its operations on its gross 13,700-acre leasehold.
Furthermore, Pogo intends to make additional acquisitions within the Permian Basin, as well as other oil and gas producing regions in
the USA, that meet its investment criteria for minimum risk, geologic quality, operator capability, remaining growth potential, cash flow
generation and, most importantly, rate of return.
As of December 31, 2023,
100% of Pogo's gross 13,700 leasehold acres were located in Eddy County, New Mexico, where there 100% of the leasehold working interests
owned by Pogo consist of state and federal lands. Pogo believes the Permian Basin offers some of the most compelling rates of return for
Pogo and significant potential for cash flow growth. As a result of compelling rates of return, development activity in the Permian Basin
has outpaced all other onshore U.S. oil and gas basins since the end of 2016. This development activity has driven basin-level production
to grow faster than production in the rest of the United States.
Pogo's working interests
entitle it to receive an average of 97% of the net revenue from crude oil and natural gas produced from the oil and gas reservoirs underlying
its acreage. Pogo is not under any mandatory obligation to fund drilling and completion costs associated with oil and gas development
because 100% of its lease holdings are held by production. As a working interest owner with significant net earnings, Pogo seeks to fully
capture all remaining oil and gas reserves underlying its leasehold acres by systematically developing its low risk, predictable, proven
reserves by means of adding perforations in previously drilled and completed wells, were applicable, and drilling new wells in a predetermined
drilling pattern. Accordingly, Pogo's development model generates strong margins greater than 60%, at low risk, predictable, production
outcomes that requires low overhead and is highly scalable. For the year ended December 31, 2023, Pogo's lifting cost was about
$27.21 per barrel of oil equivalent at a realized price of $72.69 per BOE, excluding the impact of settled commodity derivatives. Pogo
is led by a management team with extensive oil and gas engineering, geologic and land expertise, long-standing industry relationships
and a history of successfully managing a portfolio of working and leasehold interests, producing crude oil and natural gas assets. Pogo
intends to capitalize on its management team's expertise and relationships to increase production and cash flow in the field.
62
Pogo Market Conditions
The price that Pogo receives
for the oil and natural gas we produce is largely a function of market supply and demand. Because Pogo's oil and gas revenues are
heavily weighted toward oil, Pogo is more significantly impacted by changes in oil prices than by changes in the price of natural gas.
World-wide supply in terms of output, especially production from properties within the United States, the production quota set
by OPEC, and the strength of the U.S. dollar can adversely impact oil prices.
Historically, commodity prices
have been volatile, and Pogo expects the volatility to continue in the future. Factors impacting the future oil supply balance are world-wide demand
for oil, as well as the growth in domestic oil production.
Pogo's Key Producing Region
As of December 31, 2023,
all of Pogo's properties were located exclusively within the Northwest Shelf of the Permian Basin. As of December 2023, the
Permian Basin had the highest level of drilling activity in the United States with greater than 300 drilling rigs operating. By comparison,
The Eagle Ford Shale region located in Southwest-central Texas has less than 60 rigs operating. The Permian Basin includes three
major geologic provinces: the Delaware Basin to the west, the Midland Basin to the east and the Central Basin Platform in between. The
Northwest Shelf is the western limits of the Delaware Basin, a sub-basin within the Permian Basin complex. The Delaware Basin is
identified by an abundant amount of oil-in-place, stacked pay potential across an approximately 3,900-foot hydrocarbon column, attractive
well economics, favorable operating environment, well developed network of oilfield service providers, and significant midstream infrastructure
in place or actively under construction. One hundred percent (100%) of Pogo's working interests are located as of December 31,
2023, on the New Mexico side of the Delaware Basin. According to the USGS, the Delaware Basin contains the largest recoverable reserves
among all unconventional basins in the United States.
We believe the stacked-play
potential of the Delaware Basin combined with favorable drilling economics support continued production growth as Pogo develops its leasehold
position and improve well-spacing and completion techniques. Relative to other basins in the continental United States, Pogo believes
the Delaware Basin is in a mid-stage of well development and that per-well returns will improve as Pogo continues to employ enhanced oil
recovery technologies on its leasehold acreage. Pogo believes these enhanced oil recoveries will continue to support development activity
where it holds significant working interest, with predictable returns leading to increasing cash flows with low maintenance costs.
Pogo's Working Interests in Grayburg-Jackson Field
As of December 31, 2023,
Pogo owns 100% working interest in 13,700 gross acres located in Eddy County, New Mexico, with a 74% weighted average net revenue. The
13,700 gross acres are strategically located in the prolific oil field, Grayburg-Jackson field. Working interests granted to the
Lessee (Pogo) under an Oil and Gas Lease are real property interests that grant ownership of the crude oil and natural gas underlying
a specific tract of land and the rights to explore for, drill for and produce crude oil and natural gas on that land or to lease those
exploration and development rights to a third party. Those rights to explore for, drill for and produce crude oil and natural gas on that
land have a set period of time for the working interest owner to exercise those rights. Typically, an Oil and Gas Lease can be automatically
extended beyond the initial lease term with continuous drilling, production or other operating activities or through negotiated contractual
lease extension options. Only when production and drilling cease, the lease terminates.
63
As of December 31, 2023,
100% of Pogo's working interests are held by production ("HBP") meaning that Pogo is not under time sensitive obligation
to drill or work-over any wells on its 13,700 acres. As of December 31, 2023, 100% of the wells and leases are operated by Pogo.
Pogo is the official Operator of record with the state and federal regulatory agencies. As of December 31, 2023, Pogo generates a
substantial majority of its revenues and cash flows from its working interests when crude oil and natural gas are produced and sold from
its acreage.
Currently, Pogo's working
interests reside entirely in the Northwest Shelf of the Permian Basin, which Pogo believes is one of the premier crude oil and natural
gas producing regions in the United States. As of December 31, 2023, Pogo's working interests covered 13,700 gross acres,
with the royalty owners retaining a weighted average 26% royalty. The following table summarizes Pogo's working interest's
position in the lands comprising its leasehold as of December 31, 2023.
LH Operating, LLC Northwest Shelf (Permian Basin) Leasehold
Date of Acquisition
Gross
Acres
Federal
Leases
State
Leases
Working
Interest
NRI
(weighted
avg.)
(1)
Royalty
Interest
(2)
Operations
HBP
2018
13,700
20
3
100
%
74
%
26
%
100
%
100
%
(1)
Pogo's
net revenue interests are based on its weighted average royalty interests across its entire leasehold
(2)
No
unleased royalty interests as of December 31, 2023.
As of December 31, 2023,
Pogo has working interests in 342 shallow (above 4,000 ft), vertical wells producing oil and gas in paying quantities. Ninety-five of
the 342 producing wells were completed between 2019 and June 2022 by Pogo. In 2019, Pogo initiated a 4-well pilot water injection
project into the Seven Rivers ("7R") oil reservoir underlying its 13,700-acre leasehold. After an evaluation period extending
into early 2020, Pogo determined the pilot project was successful by producing oil in paying quantities by simply adding perforations
in the 7R reservoir in previously drilled and completed wells. Following the successful completion of the 4-well pilot project, Pogo
commenced a work-over program by adding perforations in the 7R reservoir in 91 previously drilled wells between 2019 and June 2022.
Prior to initiating the 4-well pilot project the legacy wells were averaging 275 BOE/d. By December 2023, the total production increased
to 1,022 BOE/d. Pogo's management team has determined, and verified by Cobb & Associates, that 115 proved well patterns,
developed but non-producing, are scheduled to be brought into production between 2024 and 2027.
As of December 31, 2023,
the estimated proved crude oil and natural gas reserves attributable to Pogo's interests in its underlying acreage were 16,002 MBOE
(96% oil and 4% natural gas), based on a reserve report prepared by Cobb & Associates, worldwide petroleum consultants. Of these
reserves, approximately 26% were classified as proved developed producing ("PDP") reserves, 47% were classified as proved
developed non-producing ("PDNP") reserves and 27% were classified as proved undeveloped ("PUD") reserves.
PUD reserves included in these estimates relate solely to wells that are not yet drilled nor were not yet producing in paying quantities
as of December 31, 2023. Estimated proved reserves included in this section is presented on an actual basis, without giving pro forma
effect to transactions completed after such dates.
Pogo believes its production
and discretionary cash flows will grow significantly as Pogo completes its substantial PDNP inventory of 7R well patterns located on its
gross 13,700 acreage. As of December 31, 2023, Pogo had production from 342 vertical wells, and it has identified 115 additional
PDNP well patterns based on its assessment of current geological, engineering and land data. As of December 31, 2023, Pogo has identified
43 PUD well patterns based on its assessment of current geological, engineering and land data
Pogo's working interest
development strategy anticipates shifting any drilling activity associated with its PUD reserves following Pogo's completion of
its PDNP reserves. The work-over costs attributable to adding perforations in wells previously drilled and completed is significantly
less than drilling new wells. As of December 31, 2023, Pogo's leasehold position has 25.7 wells per square mile. Pogo expects
to see increases in its production, revenue and discretionary cash flows from the development of 115 well patterns in the 7R reservoir.
Pogo believes its current leasehold working interests provide the potential for significant long-term organic revenue growth as Pogo
develops its PDNP reserves to increase crude oil and natural gas production.
64
Pogo Business Strategies
Pogo's primary business
objective is to generate discretionary cash flow by maintaining its strong cash flow from the PDP reserves and increasing cash flow by
developing predictable, low cost PDNP reserves in its Permian Basin asset. Pogo intends to accomplish this objective by executing the
following strategies:
Generate strong cash
flow supported by means of disciplined development of its PDNP Reserves.
As the sole working interest owner, Pogo benefits from
the continued organic development of its acreage in the Permian Basin. As of December 31, 2023, Pogo, in conjunction with Cobb &
Associates, a third-party engineering consulting firm, has confirmed that Pogo has 115, low cost, well patterns to be developed during
2024 to 2027. The total costs to complete these 115 well patterns have been predetermined by historical analysis. The estimated cost to
complete each PDNP pattern is $345,652 and the estimated cost to complete each PUD pattern is $1,187,698. A single well pattern consists
of one each producing well with its corresponding or dedicated water injection wells, with each injection well situated on four sides
of the producing well. Water injection wells are necessary to maintain reservoir pressure in its original state and to move the oil in
place toward the producing well. Pressure maintenance helps ensure maximum oil and gas recovery. Without pressure maintenance, oil recoveries
from a producing oil reservoir generally do not exceed 10% of the original oil in place ("OOIP"). With pressure maintenance
by re-injecting produced water into the oil reservoir, then Pogo expects to see ultimate oil recoveries 25% or greater of the OOIP. Offsetting
oil wells on its leasehold also take advantage of the water injected into the oil reservoir, and is able to convert a high percentage
of its revenue to discretionary cash flow. Because Pogo owns 100% working interests it incurs 100% of the monthly leasehold operating
costs for the production of crude oil and natural gas or capital costs for the drilling and completion of wells on its acreage. Because
these wells are shallow oil producers, with vertical depths between 1500 ft and 4000 ft, the monthly operating expenses are relatively
low.
Focus primarily on
the Permian Basin.
All of Pogo's working interests are currently located in the Permian Basin, one of the most prolific
oil and gas basins in the United States. Pogo believes the Permian Basin provides an attractive combination of highly-economic and
oil-weighted geologic and reservoir properties, opportunities for development with significant inventory of drilling locations and
zo
nes to be delineated our top-tier management team.
●
Business
                                            Relations.
Leverage expertise and relationships to continue acquiring Permian Basin targets
                                            with high working interests in actively producing oil fields from top-tier E&P operators,
                                            with predictable, stable cash flow, and with significant growth potential. Pogo has a history
                                            of evaluating, pursuing and consummating acquisitions of crude oil and natural gas targets
                                            in the Permian Basin and other oil producing basins. Pogo's management team intends
                                            to continue to apply this experience in a disciplined manner when identifying and acquiring
                                            working interests. Pogo believes that the current market environment is favorable for oil
                                            and gas acquisitions in the Permian Basin and other oil generating basins. Numerous asset
                                            packages from sellers presents attractive opportunities for assets that meet Pogo's
                                            target investment criteria. With sellers seeking to monetize their investments, Pogo intends
                                            to continue to acquire working interests that have substantial resource potential in the
                                            Permian Basin. Pogo expects to focus on acquisitions that complement its current footprint
                                            in the Permian Basin while targeting working interests underlying large scale, contiguous
                                            acreage positions that have a history of predictable, stable oil and gas production rates,
                                            and with attractive growth potential. Furthermore, Pogo seeks to maximize its return on capital
                                            by targeting acquisitions that meet the following criteria:
●
sufficient
                                            visibility to production growth;
●
attractive
                                            economics;
●
de-risked geology
                                            supported by stable production;
●
targets
                                            from top-tier E&P operators; and
●
a
                                            geographic footprint that Pogo believes is complementary to its current Permian Basin asset
                                            and maximizes its potential for upside reserve and production growth.
65
Maintain conservative and
flexible capital structure to support Pogo's business and facilitate long-term operations.
Pogo is committed to maintaining
a conservative capital structure that will afford it the financial flexibility to execute its business strategies on an ongoing basis.
Pogo believes that internally generated cash flows from its working interests and operations, available borrowing capacity under its revolving
credit facility, and access to capital markets will provide it with sufficient liquidity and financial flexibility to continue to acquire
attractive targets with high working interests that will position it to grow its cash flows in order to distributed to its shareholders
as dividends and/or reinvested to further expand its base of cash flow generating assets. Pogo intends to maintain a conservative leverage
profile and utilize a mix of cash flows from operations and issuance of debt and equity securities to finance future acquisitions.
Pogo Competitive Strengths
Pogo believes that the following
competitive strengths will allow it to successfully execute its business strategies and achieve its primary business objective:
●
Permian
Basin focused public company positioned as a preferred buyer in the basin.
Pogo believes that its focus on the Permian Basin
will position it as a preferred buyer of Permian Basin working interests in known producing oil and gas fields. As of December 31,
2023, 100% of its current leasehold is located in an area with proven results from multiple stacked productive zones. Pogo's properties
in the Permian Basin are high-quality, high-margin, and oil weighted, and Pogo believes they will be viewed favorably by the investment
community as compared to equity consideration diluted by lower quality assets located in less prolific basins. Pogo targets acquisitions
of operated properties with high working interest percentages that are relatively undeveloped in the Permian Basin, and it believes the
organic development of its acreage will result in substantial production growth regardless of acquisition activity.
●
Favorable
and stable operating environment in the Permian Basin.
With over 400,000 wells drilled in the Permian Basin since 1900, the region
features a reliable and predictable geological and regulatory environment, according to Enverus. Pogo believes that the impact of new
technology, combined with the substantial geological information available about the Permian Basin, also reduces the risk of development
and exploration activities as compared to other, emerging hydrocarbon basins. As of December 31, 2023, 100% of Pogo's acreage
was located in New Mexico and does not require federal approval to develop its 115 well patterns classified as PDNP reserves and does
not have impediments in order to deliver Pogo's production to market.
●
Experienced
team with an extensive track record.
Pogo's team has deep industry experience focused on development in the Permian Basin
as well as other significant oil producing regions and has a track record of identifying acquisition targets, negotiating agreements,
and successfully consummating acquisitions, and operating the acquired target using industry standards. Pogo plans to continue to evaluate
and pursue acquisitions of all sizes. Pogo expects to benefit from the industry relationships fostered by its management team's
decades of experience in the oil and natural gas industry with a focus on the Permian Basin, in addition to leveraging its relationships
with many E & P company executives.
●
Development
potential of the properties underlying Pogo's Permian Basin working interests.
Pogo's assets consist of 100% working
interests in a gross 13,700 acres located in the Northwest Shelf of the Permian Basin. Pogo expects production from its working interest
ownership to increase its oil and gas production by 1,358 BOE/d as it develops its PDNP reserves after completing 115 well patterns.
Pogo believes its assets in the Permian Basin is in an earlier to mid-stage of development and that the average number of producing
wells per section in its 13,700-acre leasehold will increase as Pogo continues to add PUD well patterns, which would allow Pogo
to achieve higher realized cash flows to distributed to its shareholders as dividends and/or reinvested to further expand its base of
cash flow generating assets. Pogo believes that once it completes its PDNP and PUD program as detailed in the Cobb & Associates
reserve report, Pogo expects its BOE/d will increase to 2,853 BOE/d combined with PDP.
66
Pogo Crude Oil and Natural Gas Data
In this prospectus, we include
estimates of reserves associated with the assets located in New Mexico as of December 31, 2022, and December 31, 2023. Such reserve
estimates are based on evaluations prepared by the independent petroleum engineering firm of Cobb & Associates, in accordance
with Standards Pertaining to the Estimating and Auditing of Oil and Gas Reserves Information promulgated by the Society of Petroleum Evaluation
Engineers and definitions and guidelines established by the SEC. We have included in this filing copies of the December 31, 2022 and December
31, 2023 reserve reports which exclude the 10% overriding royalty interest not acquired in the Purchase as Exhibits 99.1 and 99.3, respectively.
In addition, we have included a copy of the December 31, 2022 reserve report which includes the 10% overriding royalty interest not acquired
in the Purchase as Exhibit 99.2. As such, the estimates of proved oil and gas and discounted future net cash flows include the total interests
of Pogo Resources, LLC.
Cobb & Associates
is an independent consulting firm founded in 1983. Its compensation is not contingent on the results obtained or reported. Frank J. Marek,
a Registered Texas Professional Engineer and a senior technical advisor of Cobb & Associates, is primarily responsible for overseeing
the preparation of the reserve report. His professional qualifications meet or exceed the qualifications of reserve estimators set forth
in the "Standards Pertaining to Estimation and Auditing of Oil and Gas Reserves Information" promulgated by the Society of
Petroleum Engineers. His qualifications include: Bachelor of Science degree in Petroleum Engineering from Texas A&M University 1977;
member of the Society of Petroleum Engineers; member of the Society of Petroleum Evaluation Engineers; and 40 years of experience
in estimating and evaluating reserve information and estimating and evaluating reserves; he is proficient in judiciously applying industry
standard practices to engineering and geoscience evaluations as well as applying SEC and other industry reserve definitions and guidelines.
Preparation of Reserve Estimates
Pogo's reserve estimates
as of December 31, 2022 and December 31, 2023 included in this prospectus are based on evaluations prepared by the independent petroleum
engineering firm of Cobb & Associates in accordance with Standards Pertaining to the Estimating and Auditing of Oil and Gas Reserves
Information promulgated by the Society of Petroleum Evaluation Engineers and definitions and guidelines established by the SEC. The December
31, 2023 reserve report excludes the 10% overriding royalty interest not acquired in the Purchase, and such report is included in this
filing as Exhibit 99.3. Unless expressly stated otherwise, when referencing the December 31, 2022 reserve report, we reference the reserve
report that includes the 10% overriding royalty interest not acquired in the Purchase because Pogo owned the entire interest at such time,
which such report is included in this filing as Exhibit 99.2. As such, the estimates of proved oil and gas and discounted future net cash
flows include the acquired interests of Pogo Resources, LLC as of December 31, 2023. Pogo selected Cobb & Associates as
its independent reserve engineer for its historical experience and geographic expertise in engineering similar resources.
In accordance with rules and
regulations of the SEC applicable to companies involved in crude oil and natural gas producing activities, proved reserves are those quantities
of crude oil and natural gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be
economically producible from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and
government regulations. The term "reasonable certainty" means deterministically, the quantities of crude oil and/or natural
gas are much more likely to be achieved than not, and probabilistically, there should be at least a 90% probability of recovering volumes
equal to or exceeding the estimate. All of Pogo's proved reserves were estimated using a deterministic method. The estimation of
reserves involves two distinct determinations. The first determination results in the estimation of the quantities of recoverable crude
oil and natural gas and the second determination results in the estimation of the uncertainty associated with those estimated quantities
in accordance with the definitions established under SEC rules. The process of estimating the quantities of recoverable reserves relies
on the use of certain generally accepted analytical procedures. These analytical procedures fall into four broad categories or methods:
(i) production performance-based methods, (ii) material balance-based methods; (iii) volumetric-based methods and (iv) analogy.
These methods may be used singularly or in combination by the reserve evaluator in the process of estimating the quantities of reserves.
Reserves for proved developed producing wells were estimated using production performance methods. Non-producing reserve estimates, for
developed and undeveloped properties, were forecast using a pattern simulation model.
To estimate economically recoverable
proved reserves and related future net cash flows, Pogo considered many factors and assumptions, including the use of reservoir parameters
derived from geological and engineering data that cannot be measured directly, economic criteria based on current costs and the SEC pricing
requirements and forecasts of future production rates.
67
Under SEC rules, reasonable
certainty can be established using techniques that have been proven effective by actual production from projects in the same reservoir
or an analogous reservoir or by other evidence using reliable technology that establishes reasonable certainty. Reliable technology is
a grouping of one or more technologies (including computational methods) that have been field tested and have been demonstrated to provide
reasonably certain results with consistency and repeatability in the formation being evaluated or in an analogous formation. To establish
reasonable certainty with respect to Pogo's estimated proved reserves, the technologies and economic data used in the estimation
of its proved reserves have been demonstrated to yield results with consistency and repeatability, and include production and well test
data, downhole completion information, geologic data, electrical logs, radioactivity logs, core data, and historical well cost and operating
expense data.
Pogo Internal Controls
Pogo's internal staff
of petroleum engineers and geoscience professionals led by our VP of Operations, who is a petroleum engineer with more than 40 years of
relevant waterflood field, directly oversees the submissions and coordinates discussions with our independent reserve engineering firm.
The VP of Operations is supported by our Chief Executive Officer, who is a petroleum engineer with more than 40 years of experience, and
three consultants with engineering and geological degrees and experience. The VP of Operations works closely with our independent reserve
engineer to ensure the integrity, accuracy and timeliness of data furnished to such independent reserve engineer in their preparation
of reserve estimates. The accuracy of any reserve estimate is a function of the quality of available data and of engineering and geological
interpretation. As a result, the estimates of different engineers often vary. In addition, the results of drilling, testing and production
may justify revisions of such estimates. Accordingly, reserve estimates often differ from the quantities of oil and natural gas that are
ultimately recovered. See "
Risk Factors Related to Our Business
" appearing elsewhere in this prospectus. Pogo's
engineering group is responsible for the internal review of reserve estimates.
No portion of Pogo's
engineering group's compensation is directly dependent on the quantity of reserves booked. The engineering group reviews the estimates
with the third-party petroleum consultant, Cobb & Associates, an independent petroleum engineering firm.
Pogo Reconciliation of Standardized Measure
to PV-10
Neither PV-10 nor PV-10 after
ARO are financial measures defined under accounting principles generally accepted in the United States of America ("GAAP");
therefore, the following table reconciles these amounts to the standardized measure of discounted future net cash flows, which is the
most directly comparable GAAP financial measure. Management believes that the non-GAAP financial measures of PV-10 and PV-10 after ARO
are relevant and useful for evaluating the relative monetary significance of oil and natural gas properties. PV-10 and PV-10 after ARO
are used internally when assessing the potential return on investment related to oil and natural gas properties and in evaluating acquisition
opportunities. Management believes that the presentation of PV-10 and PV-10 after ARO provide useful information to investors because
they are widely used by professional analysts and sophisticated investors in evaluating oil and natural gas companies. PV-10 and PV-10
after ARO are not measures of financial or operating performance under GAAP, nor are they intended to represent the current market value
of our estimated oil and natural gas reserves. PV-10 after ARO is equivalent to the standardized measure of discounted future net cash
flows as defined under GAAP. Investors should not assume that PV-10, or PV-10 after ARO, of our proved oil and natural gas reserves shown
above represent a current market value of our estimated oil and natural gas reserves.
The reconciliation of PV-10
and PV-10 after ARO to the standardized measure of discounted future net cash flows relating to our estimated proved oil and natural gas
reserves is as follows (in thousands):
December 31,
2023
December 31,
2022
Present value of estimated future net revenues (PV-10)
$
281,018
$
519,775
Present value of estimated ARO, discounted at 10%
(173
)
(228
)
Standardized measure
$
280,618
$
519,547
68
Pogo Summary of Reserves
The following table presents
Pogo's estimated proved reserves as of December 31, 2023 and 2022. The following table is based off of the December 31,
2023 reserve report, which excludes the 10% overriding royalty interest not acquired in the Purchase, and is included in this filing as
Exhibit 99.3. The following table is also based off of the December 31, 2022 reserve report, which includes the 10% overriding royalty
interest not acquired in the Purchase because Pogo owned the entire interest at such time, and such report is included in this filing
as Exhibit 99.2. As such, the estimates of proved oil and gas and discounted future net cash flows include the total interests of Pogo
Resources, LLC. The reserve estimates presented in the table below are based on reports prepared by Cobb & Associates, Pogo's
independent petroleum engineers, which reports were prepared in accordance with current SEC rules and regulations regarding oil and natural
gas reserve reporting:
December 31,
2023
(1)
December 31,
2022
(2)
Estimated proved developed producing reserves:
Crude Oil (MBbls)
4,002
6,060
Natural Gas (MMcf)
1,149
2,077
NGLs (MBbls)
0
0
Total (MBOE)
4,194
6,406
Estimated proved non-producing reserves:
Crude Oil (MBbls)
7,275
6,954
Natural Gas (MMcf)
1,526
1,496
NGLs (MBbls)
0
0
Total (MBOE)
7,529
7,203
Estimated proved undeveloped reserves:
Crude Oil (MBbls)
4,137
4,564
Natural Gas (MMcf)
850
1,000
NGLs (MBbls)
0
0
Total (MBOE)
4,279
4,730
Estimated proved reserves:
Crude Oil (MBbls)
15,414
17,577
Natural Gas (MMcf)
3,525
4,572
NGLs (MBbls)
0
0
Total (MBOE)
16,002
18,339
(1)
Pogo's estimated proved reserves were determined using average first-day-of-the-month prices for the prior 12 months in accordance with SEC guidance. For crude oil volumes, the average WTI posted spot price of $78.22 per Bbl as of December 31, 2023, was adjusted for quality, transportation fees and a regional price differential. For natural gas volumes, the average Henry Hub spot price of $2.64 per MMBtu as of December 31, 2023, was adjusted for energy content, transportation fees and a regional price differential. The average adjusted product prices weighted by production over the remaining lives of the proved properties are $78.40 per Bbl of crude oil and $2.38 per Mcf of natural gas as of December 31, 2023.
(2)
Pogo's estimated proved reserves were determined using average first-day-of-the-month prices for the prior 12 months in accordance with SEC guidance. For crude oil volumes, the average WTI posted spot price of $93.67 per Bbl as of December 31, 2022, was adjusted for quality, transportation fees and a regional price differential. For natural gas volumes, the average Henry Hub spot price of $6.35 per MMBtu as of December 31, 2022, was adjusted for energy content, transportation fees and a regional price differential. The average adjusted product prices weighted by production over the remaining lives of the proved properties are $94.53 per Bbl of crude oil and $4.14 per Mcf of natural gas as of December 31, 2022.
Reserve engineering is a process
of estimating volumes of economically recoverable crude oil and natural gas that cannot be measured in an exact manner. The accuracy of
any reserve estimate is a function of the quality of available data and of engineering and geological interpretation. As a result, the
estimates of different engineers often vary. In addition, the results of drilling, testing, and production may justify revisions of such
estimates. Accordingly, reserve estimates often differ from the quantities of crude oil and natural gas that are ultimately recovered.
Estimates of economically recoverable crude oil and natural gas and of future net revenues are based on a number of variables and assumptions,
all of which may vary from actual results, including geologic interpretation, prices, and future production rates and costs. Please read
"
Risk Factors Related to Our Business
."
69
Pogo PUDs
As of December 31, 2022,
Pogo estimated its PUD reserves to be 4,564 MBbls of crude oil and 1,000 MMcf of natural gas for a total of 4,730 MBOE. As of December
31, 2023, Pogo estimated its PUD reserves to be 4,137 MBbls of crude oil and 850 MMcf of natural gas for a total of 4,279 MBOE. PUDs
will be converted from undeveloped to developed as the applicable wells begin production.
The following table summarizes
Pogo's changes in PUD reserves during the year ended December 31, 2022 (in MBOE):
Proved
Undeveloped
Reserves
(MBOE)
Balance, December 31, 2021
4,847
Acquisitions of Reserves
0
Extensions and Discoveries
0
Revisions of Previous Estimates
(117
)
Transfers to Estimated Proved Developed
0
Balance, December 31, 2022
4,730
The following table summarizes
Pogo's changes in PUD reserves during the year ended December 31, 2023 (in MBOE):
Proved
Undeveloped
Reserves
(MBOE)
Balance, December 31, 2022
4,730
Acquisitions of Reserves
0
Extensions and Discoveries
0
Revisions of Previous Estimates
(451
)
Transfers to Estimated Proved Developed
0
Balance, December 31, 2023
4,279
Changes in Pogo's PUD
reserves that occurred during the year ended December 31, 2022, and 2023 were primarily due to increased operating costs.
Pogo has not made any capital
expenditures in order to convert its existing PUDs because Pogo has been allocating its capital resources to convert PDNP reserves to
PDP reserves and not to convert its PUD reserves to PDNP or PDP reserves.
Pogo's PUD reserves
at December 31, 2022 and 2023 are based on a development plan instituted by Pogo's management. All of such reserves are scheduled
to be developed within five years from the date such locations were initially disclosed as PUD reserves. Our development plan is prepared
annually by management and approved by the Board of Directors. Our PUD reserves only represent reserves that are scheduled, based on such
plan, to be developed within five years from the date such locations were initially disclosed as PUDs. At December 31, 2023, Pogo estimates
that its future development costs relating to the development of PUD reserves are $0 in 2024, $13.5 million in 2025, $29.3 million in
2026 and $8.3 million in 2027. Under our development plan, our existing PUDs are expected to be converted to PDP reserves by 2027.
70
Pogo Crude Oil and Natural Gas Production Prices and Costs
Production and Price History
The following table sets forth
information regarding net production of crude oil and natural gas and certain price and cost information for each of the periods indicated:
Year Ended
December 31,
2023
Year Ended
December 31,
2022
Production data:
Crude Oil (MBbls)
349
397
Natural Gas (MMcf)
356
457
NGLs (MBbls)
0
0
Total (MBOE)
409
473
Average realized prices:
Crude Oil (per Bbl)
$
72.69
$
95.66
Natural Gas (per Mcf)
$
2.48
$
4.29
NGLs (per Bbl)
$
0.00
$
0.00
Total (per BOE)
(1)
$
64.31
$
84.41
Average cost (per BOE):
Lease Operating Expenses
$
24.86
$
17.79
Production and ad valorem taxes
$
5.74
$
7.36
(1)
"Btu-equivalent"
production volumes are presented on an oil-equivalent basis using a conversion factor of six Mcf of natural gas per Bbl of "oil
equivalent," which is based on approximate energy equivalency and does not reflect the price or value relationship between crude
oil and natural gas.
Productive Wells
Productive wells located on
Pogo's leasehold consist of producing vertical wells that are capable of producing oil and gas in paying quantities and are not
dry wells. As of December 31, 2023, Pogo owned working interests in 342 producing wells, 207 water injectors, and one water source well,
all located on its 13,700 gross acre leasehold. Only one well owned by Pogo is approved to be plugged and abandoned.
Pogo is not aware of any dry
holes drilled on the acreage underlying its working interest during the relevant periods.
The following table sets forth
the total number of gross and net productive wells, all of which are oil wells.
As of December 31,
2023
Gross
Net
Productive
342
342
Dry holes
—
—
Total
342
342
Drilling and other exploration and development
activities
For the years ended 2023 and
2022, Pogo did not drill any new wells.
As of December 31, 2023, there
were no wells being completed or waiting on completion. Furthermore, we were not installing any waterfloods or pressure maintenance systems
or engaging in any other development activity as of such date.
71
Acreage and Ownership
The following figures sets
forth information relating to Pogo's acreage for its working interests as of December 31, 2023:
Pogo owns 100% working interests
that is subject to a 26% weighted average net royalty interest across its 13,700 gross acres as of December 31, 2023. For information
regarding the impact of lease expirations on our interests, please see "
Risks Related to Our Business
." All of Pogo's
13,700 acres are held by production and or not under any mandatory lease expiration.
Pogo's leasehold is
100% operated through its wholly owned subsidiary LH Operating and 100% of its 13,700 gross acre leasehold is HBP. The leasehold
is comprised of 23 total leases, 20 BLM and 3 NM State leases. Ninety-seven percent of its leasehold classified as PDP has title opinion
coverage. For regulatory purposes, the current producing reservoirs, 7R, Queen, Grayburg, and San Andres, are considered a single, unitized
pool ("pool") for all current PDP reserves and PDNP reserves. No regulatory approval is required prior to performing workovers
on existing wells within the pool (i.e., perforations, fracking, or acidizing, etc.).
LH Operating, LLC was created
to solely manage this asset on behalf of Pogo. LH Operating has performed its duties for two (2) years without any known liabilities,
and are in good standing with regulatory agencies. LH Operating is fully bonded to operate in New Mexico.
Leasehold acreage
The following table sets forth
certain information regarding the total developed and undeveloped acreage in which Pogo owned an interest as of December 31, 2023.
Developed Acres
Undeveloped Acres
Total Acres
Gross
Net
Gross
Net
Gross
Net
Total
13,700
13,700
0
0
13,700
13,700
72
All leasehold acreage of Pogo
is considered to be "Developed Acres" because completed producing wells or wells capable of producing in economic quantities
are located throughout the entirety of the acreage such that the acreage allocated to such wells for production on a spacing, allocated,
unitized or pooled basis comprise the entire 13,700 acres leased by Pogo. The interests of Pogo in the oil, gas and other minerals in
"Developed Acres" are, or may be, composed of one or multiple stratigraphic zones producing or capable of producing oil and
gas in economic quantities.
The leasehold of Pogo has
undergone development activities, including drilling, completion, and production operations in the Grayburg/San Andres zones ("legacy
zones") and/or the Seven Rivers waterflood zones. As a result, there are no remaining leasehold portions that require initial development.
Pogo has identified new potential proved undeveloped reserves within the incremental waterflood zone of the Seven Rivers. Pogo intends
to develop and produce the Seven Rivers zone comprised of approximately 1,677 acres underlying a portion of the Developed Acres including,
without limitation, infield drilling or perforation and recompletion of existing wells.
Pogo Regulation
The following disclosure describes
regulations directly associated with E&P companies who are classified with state and federal regulatory agencies as Operator of record
of crude oil and natural gas properties, including Pogo.
Crude oil and natural gas
operations are subject to various types of legislation, regulation and other legal requirements enacted by governmental authorities. This
legislation and regulation affecting the crude oil and natural gas industry is under constant review for amendment or expansion. Some
of these requirements carry substantial penalties for failure to comply. The regulatory burden on the crude oil and natural gas industry
increases the cost of doing business.
Environmental Matters
Crude oil and natural gas
exploration, development and production operations are subject to stringent laws and regulations governing the discharge of materials
into the environment or otherwise relating to protection of the environment or occupational health and safety. These laws and regulations
have the potential to impact production on the properties in which Pogo owns working interest, which could materially adversely affect
its business and its prospects. Numerous federal, state and local governmental agencies, such as the EPA, issue regulations that often
require difficult and costly compliance measures that carry substantial administrative, civil and criminal penalties and may result in
injunctive obligations for non-compliance. These laws and regulations may require the acquisition of a permit before drilling commences,
restrict the types, quantities and concentrations of various substances that can be released into the environment in connection with drilling
and production activities, limit or prohibit construction or drilling activities on certain lands lying within wilderness, wetlands, ecologically
sensitive and other protected areas, require action to prevent or remediate pollution from current or former operations, such as plugging
abandoned wells or closing earthen pits, result in the suspension or revocation of necessary permits, licenses and authorizations, require
that additional pollution controls be installed and impose substantial liabilities for pollution resulting from operations. The strict,
joint and several liability nature of such laws and regulations could impose liability upon the Operator of record regardless of fault.
Moreover, it is not uncommon for neighboring landowners and other third parties to file claims for personal injury and property damage
allegedly caused by the release of hazardous substances, hydrocarbons or other waste products into the environment. Changes in environmental
laws and regulations occur frequently, and any changes that result in more stringent and costly pollution control or waste handling, storage,
transport, disposal or cleanup requirements could materially adversely affect Pogo's business and prospects.
Non-Hazardous and Hazardous Waste
The Resource Conservation
and Recovery Act ("RCRA"), and comparable state statutes and regulations promulgated thereunder, affect crude oil and natural
gas exploration, development, and production activities by imposing requirements regarding the generation, transportation, treatment,
storage, disposal and cleanup of hazardous and non-hazardous wastes. With federal approval, the individual states administer some
or all of the provisions of RCRA, sometimes in conjunction with their own, more stringent requirements. Administrative, civil and criminal
penalties can be imposed for failure to comply with waste handling requirements. Although most wastes associated with the exploration,
development and production of crude oil and natural gas are exempt from regulation as hazardous wastes under RCRA, these wastes typically
constitute nonhazardous solid wastes that are subject to less stringent requirements. From time to time, the EPA and state regulatory
agencies have considered the adoption of stricter disposal standards for nonhazardous wastes, including crude oil and natural gas wastes.
Moreover, it is possible that some wastes generated in connection with exploration and production of oil and gas that are currently classified
as nonhazardous may, in the future, be designated as "hazardous wastes," resulting in the wastes being subject to more rigorous
and costly management and disposal requirements. On May 4, 2016, a coalition of environmental groups filed a lawsuit against EPA
in the U.S. District Court for the District of Columbia for failing to update its RCRA Subtitle D criteria regulations governing
the disposal of certain crude oil and natural gas drilling wastes. In December 2016, EPA and the environmental groups entered into
a consent decree to address EPA's alleged failure. In response to the consent decree, in April 2019, the EPA signed a determination
that revision of the regulations is not necessary at this time. However, any changes in the laws and regulations could have a material
adverse effect on the Operator of record (Pogo) of its properties' capital expenditures and operating expenses, which in turn could
affect production from the acreage underlying Pogo's working interests and adversely affect Pogo's business and prospects.
73
Remediation
The Comprehensive Environmental
Response, Compensation, and Liability Act ("CERCLA") and analogous state laws generally impose strict, joint and several liability,
without regard to fault or legality of the original conduct, on classes of persons who are considered to be responsible for the release
of a "hazardous substance" into the environment. These persons include the current owner or operator of a contaminated facility,
a former owner or operator of the facility at the time of contamination, and those persons that disposed or arranged for the disposal
of the hazardous substance at the facility. Under CERCLA and comparable state statutes, persons deemed "responsible parties"
may be subject to strict, joint and several liability for the costs of removing or remediating previously disposed wastes (including wastes
disposed of or released by prior owners or operators) or property contamination (including groundwater contamination), for damages to
natural resources and for the costs of certain health studies. In addition, it is not uncommon for neighboring landowners and other third
parties to file claims for personal injury and property damage allegedly caused by the hazardous substances released into the environment.
In addition, the risk of accidental spills or releases could expose Pogo's working interests underlying its leasehold acreage to
significant liabilities that could have a material adverse effect on the operators' businesses, financial condition and results
of operations. Liability for any contamination under these laws could require Pogo to make significant expenditures to investigate and
remediate such contamination or attain and maintain compliance with such laws and may otherwise have a material adverse effect on their
results of operations, competitive position or financial condition.
Water Discharges
The Clean Water Act ("CWA"),
the SDWA, the Oil Pollution Act of 1990 ("OPA"), and analogous state laws and regulations promulgated thereunder
impose restrictions and strict controls regarding the unauthorized discharge of pollutants, including produced waters and other crude
oil and natural gas wastes, into regulated waters. The definition of regulated waters has been the subject of significant controversy
in recent years. The EPA and U.S. Army Corps of Engineers published a revised definition on January 18, 2023, which has been
challenged in court. To the extent any future rule expands the scope of jurisdiction, it may impose greater compliance costs or operational
requirements on Pogo as the Operator of record. The discharge of pollutants into regulated waters is prohibited, except in accordance
with the terms of a permit issued by the EPA or the state. The CWA and regulations implemented thereunder also prohibit the discharge
of dredge and fill material into regulated waters, including jurisdictional wetlands, unless authorized by an appropriately issued permit.
In addition, spill prevention, control and countermeasure plan requirements under federal law require appropriate containment berms and
similar structures to help prevent the contamination of navigable waters in the event of a petroleum hydrocarbon tank spill, rupture or
leak. Production EPA has also adopted regulations requiring certain crude oil and natural gas facilities to obtain individual permits
or coverage under general permits for storm water discharges, and in June 2016, the EPA finalized effluent limitation guidelines
for the discharge of wastewater from hydraulic fracturing.
The OPA is the primary federal
law for crude oil spill liability. The OPA contains numerous requirements relating to the prevention of and response to petroleum releases
into regulated waters, including the requirement that operators of offshore facilities and certain onshore facilities near or crossing
waterways must develop and maintain facility response contingency plans and maintain certain significant levels of financial assurance
to cover potential environmental cleanup and restoration costs. The OPA subject's owners of facilities to strict, joint and several
liability for all containment and cleanup costs and certain other damages arising from a release, including, but not limited to, the costs
of responding to a release of crude oil into surface waters.
74
Noncompliance with the CWA,
the SDWA, or the OPA may result in substantial administrative, civil and criminal penalties, as well as injunctive obligations, for the
Operator of record (Pogo) underlying its leasehold working interest.
Air Emissions
The CAA, and comparable state
laws and regulations, regulate emissions of various air pollutants through the issuance of permits and the imposition of other requirements.
The EPA has developed, and continues to develop, stringent regulations governing emissions of air pollutants at specified sources. New
facilities may be required to obtain permits before work can begin, and existing facilities may be required to obtain additional permits
and incur capital costs in order to remain in compliance. For example, in June 2016, the EPA established criteria for aggregating
multiple small surface sites into a single source for air quality permitting purposes, which could cause small facilities, on an aggregate
basis, to be deemed a major source subject to more stringent air permitting processes and requirements. These laws and regulations may
increase the costs of compliance for crude oil and natural gas producers and impact production of the acreage underlying Pogo's
working interests. In addition, federal and state regulatory agencies can impose administrative, civil and criminal penalties for non-compliance with
air permits or other requirements of the federal CAA and associated state laws and regulations. Moreover, obtaining or renewing permits
has the potential to delay the development of crude oil and natural gas projects.
Climate Change
Climate change continues to
attract considerable public and scientific attention. As a result, numerous proposals have been made and are likely to continue to be
made at the international, national, regional and state levels of government to monitor and limit emissions of carbon dioxide, methane
and other GHGs. These efforts have included consideration of cap-and-trade programs, carbon taxes, GHG reporting and tracking programs
and regulations that directly limit GHG emissions from certain sources.
In the United States,
no comprehensive climate change legislation has been implemented at the federal level. However, President Biden has highlighted addressing
climate change as a priority of his administration and has issued several executive orders addressing climate change. Moreover, following
the U.S. Supreme Court finding that GHG emissions constitute a pollutant under the CAA, the EPA has adopted regulations that, among
other things, establish construction and operating permit reviews for GHG emissions from certain large stationary sources, require the
monitoring and annual reporting of GHG emissions from certain petroleum and natural gas system sources in the United States, and
together with the DOT, implementing GHG emissions limits on vehicles manufactured for operation in the United States. The regulation
of methane from oil and gas facilities has been subject to uncertainty in recent years. In September 2020, the Trump Administration
revised regulations initially promulgated in June 2016 to rescind certain methane standards and remove the transmission and storage
segments from the source category for certain regulations. However, subsequently, the U.S. Congress approved, and President Biden
signed into law, a resolution under the Congressional Review Act to repeal the September 2020 revisions to the methane standards,
effectively reinstating the prior standards. Additionally, in November 2021, the EPA issued a proposed rule that, if finalized, would
establish new source and first-time existing source standards of performance for methane and volatile organic compound emissions
for oil and gas facilities. Operators of affected facilities will have to comply with specific standards of performance to include leak
detection using optical gas imaging and subsequent repair requirement, and reduction of emissions by 95% through capture and control systems.
The EPA issued supplemental rules regarding methane emissions on December 6, 2022. The IRA established the Methane Emissions Reduction
Program, which imposes a charge on methane emissions from certain petroleum and natural gas facilities, which may apply to our operations
in the future and may require us to expend material sums. We cannot predict the scope of any final methane regulatory requirements or
the cost to comply with such requirements. However, given the long-term trend toward increasing regulation, future federal GHG regulations
of the oil and gas industry remain a significant possibility.
Separately, various states
and groups of states have adopted or are considering adopting legislation, regulation or other regulatory initiatives that are focused
on such areas as GHG cap and trade programs, carbon taxes, reporting and tracking programs, and restriction of emissions. For example,
New Mexico has adopted regulations to restrict the venting or flaring of methane from both upstream and midstream operations. At the international
level, the United Nations-sponsored "Paris Agreement" requires member states to submit non-binding, individually-determined reduction
goals known as Nationally Determined Contributions every five years after 2020. President Biden has recommitted the United States
to the Paris Agreement and, in April 2021, announced a goal of reducing the United States' emissions by 50-52% below
2005 levels by 2030. Additionally, at COP26 in Glasgow in November 2021, the United States and the European Union jointly announced
the launch of a Global Methane Pledge, an initiative committing to a collective goal of reducing global methane emissions by at least
30 percent from 2020 levels by 2030, including "all feasible reductions" in the energy sector. The full impact of these
actions cannot be predicted at this time.
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Governmental, scientific,
and public concern over the threat of climate change arising from GHG emissions has resulted in increasing political risks in the United States,
including climate change related pledges made by certain candidates now in public office. On January 27, 2021, President Biden issued
an Executive Order that calls for substantial action on climate change, including, among other things, the increased use of zero-emission vehicles
by the federal government, the elimination of subsidies provided to the fossil fuel industry, and increased emphasis on climate-related risks
across government agencies and economic sectors. The Biden Administration has also called for restrictions on leasing on federal land,
including the Department of the Interior's publication of a report recommending various changes to the federal leasing program,
though many such changes would require Congressional action. Substantially all of Pogo's interests are located on state and federal,
and it cannot predict the full impact of these developments or whether the Biden Administration may pursue further restrictions. Other
actions that could be pursued by the Biden Administration may include the imposition of more restrictive requirements for the establishment
of pipeline infrastructure or the permitting of LNG export facilities, as well as more restrictive GHG emission limitations for oil and
gas facilities. Litigation risks are also increasing as a number of entities have sought to bring suit against various oil and natural
gas companies in state or federal court, alleging among other things that such companies created public nuisances by producing fuels that
contributed to climate change or alleging that the companies have been aware of the adverse effects of climate change for some time but
defrauded their investors or customers by failing to adequately disclose those impacts.
There are also increasing
financial risks for fossil fuel producers as shareholders currently invested in fossil-fuel energy companies may elect in the future
to shift some or all of their investments into non-fossil fuel related sectors. Institutional lenders who provide financing to fossil
fuel energy companies also have become more attentive to sustainable lending practices and some of them may elect not to provide funding
for fossil fuel energy companies. For example, at COP26, GFANZ announced that commitments from over 450 firms across 45 countries had
resulted in over $130 trillion in capital committed to net zero goals. The various sub-alliances of GFANZ generally require
participants to set short-term, sector-specific targets to transition their financing, investing, and/or underwriting activities
to net zero emissions by 2050. There is also a risk that financial institutions will be required to adopt policies that have the effect
of reducing the funding provided to the fossil fuel sector. In late 2021, the Federal Reserve announced that it had joined the Network
for Greening the Financial System, a consortium of financial regulators focused on addressing climate-related risks in the financial
sector. Subsequently, in November 2021, the Federal Reserve issued a statement in support of the efforts of the Network for Greening
the Financial System to identify key issues and potential solutions for the climate-related challenges most relevant to central banks
and supervisory authorities. Limitation of investments in and financing for fossil fuel energy companies could result in the restriction,
delay or cancellation of drilling programs or development or production activities. Additionally, the SEC announced its intention to promulgate
rules requiring climate disclosures. Although the form and substance of these requirements is not yet known, this may result in additional
costs to comply with any such disclosure requirements.
The adoption and implementation
of new or more stringent international, federal or state legislation, regulations or other regulatory initiatives that impose more stringent
standards for GHG emissions from the oil and natural gas sector or otherwise restrict the areas in which this sector may produce oil and
natural gas or generate the GHG emissions could result in increased costs of compliance or costs of consuming, and thereby reduce demand
for oil and natural gas, which could reduce the profitability of Pogo's working interests. Additionally, political, litigation and
financial risks may result in Pogo restricting or cancelling production activities, incurring liability for infrastructure damages as
a result of climatic changes, or impairing their ability to continue to operate in an economic manner, which also could reduce the profitability
of Pogo's working interests. One or more of these developments could have a material adverse effect on Pogo's business, financial
condition and results of operation.
Climate change may also result
in various physical risks, such as the increased frequency or intensity of extreme weather events or changes in meteorological and hydrological
patterns, that could adversely impact our operations and Pogo's supply chains. Such physical risks may result in damage to Pogo's
facilities or otherwise adversely impact our operations, such as if they become subject to water use curtailments in response to drought,
or demand for their products, such as to the extent warmer winters reduce the demand for energy for heating purposes. Extreme weather
conditions can interfere with production and increase costs and damage resulting from extreme weather may not be fully insured. However,
at this time, Pogo is unable to determine the extent to which climate change may lead to increased storm or weather hazards affecting
its business.
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Regulation of Hydraulic Fracturing
Hydraulic fracturing is an
important and common practice that is used to stimulate production of hydrocarbons from tight formations. The process involves the injection
of water, sand and chemicals under pressure into formations to fracture the surrounding rock and stimulate production. Hydraulic fracturing
operations have historically been overseen by state regulators as part of their crude oil and natural gas regulatory programs.
However, several agencies
have asserted regulatory authority over certain aspects of the process. For example, in August 2012, the EPA finalized regulations
under the federal CAA that establish new air emission controls for crude oil and natural gas production and natural gas processing operations.
Federal regulation of methane emissions from the oil and gas sector has been subject to substantial controversy in recent years.
In addition, governments have
studied the environmental aspects of hydraulic fracturing practices. These studies, depending on their degree of pursuit and whether any
meaningful results are obtained, could spur initiatives to further regulate hydraulic fracturing under the SDWA or other regulatory authorities.
For example, in December 2016, the EPA issued its final report on a study it had conducted over several years regarding the
effects of hydraulic fracturing on drinking water sources. The final report, concluded that "water cycle" activities associated
with hydraulic fracturing may impact drinking water under certain limited circumstances.
Several states have adopted,
or are considering adopting, regulations that could restrict or prohibit hydraulic fracturing in certain circumstances and/or require
the disclosure of the composition of hydraulic fracturing fluids. For example, the Railroad Commission of Texas has previously issued
a "well integrity rule," which updates the requirements for drilling, putting pipe down, and cementing wells. The rule also
includes new testing and reporting requirements, such as: (i) the requirement to submit cementing reports after well completion or
after cessation of drilling, whichever is later; and (ii) the imposition of additional testing on wells less than 1,000 feet below
usable groundwater. The well integrity rule took effect in January 2014. Local governments also may seek to adopt ordinances within
their jurisdictions regulating the time, place and manner of drilling activities in general or hydraulic fracturing activities in particular
or prohibit the performance of well drilling in general or hydraulic fracturing in particular.
State and federal regulatory
agencies recently have focused on a possible connection between the hydraulic fracturing related activities, particularly the disposal
of produced water in underground injection wells, and the increased occurrence of seismic activity. When caused by human activity, such
events are called induced seismicity. In some instances, operators of injection wells in the vicinity of seismic events have been ordered
to reduce injection volumes or suspend operations. Some state regulatory agencies, including those in Colorado, Ohio, Oklahoma and Texas,
have modified their regulations to account for induced seismicity. For example, in October 2014, the Railroad Commission published
a new rule governing permitting or re-permitting of disposal wells that would require, among other things, the submission of information
on seismic events occurring within a specified radius of the disposal well location, as well as logs, geologic cross sections and structure
maps relating to the disposal area in question. If the permittee or an applicant of a disposal well permit fails to demonstrate that the
produced water or other fluids are confined to the disposal zone or if scientific data indicates such a disposal well is likely to be
or determined to be contributing to seismic activity, then the agency may deny, modify, suspend or terminate the permit application or
existing operating permit for that well. The Railroad Commission of Texas has used this authority to deny permits for waste disposal wells.
In some instances, regulators may also order that disposal wells be shut in. In late 2021, the Railroad Commission of Texas issued a notice
to operators of disposal wells in the Midland area, to reduce saltwater disposal well actions and provide certain data to the commission.
Separately, in November 2021, New Mexico implemented protocols requiring operators to take various actions within a specified proximity
of certain seismic activity, including a requirement to limit injection rates if a seismic event is of a certain magnitude. As a result
of these developments, Pogo as the Operator of record may be required to curtail operations or adjust development plans, which may adversely
impact Pogo's business.
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The USGS has identified six
states with the most significant hazards from induced seismicity, including New Mexico, Oklahoma and Texas. In addition, a number of lawsuits
have been filed, most recently in Oklahoma, alleging that disposal well operations have caused damage to neighboring properties or otherwise
violated state and federal rules regulating waste disposal. These developments could result in additional regulation and restrictions
on the use of injection wells and hydraulic fracturing. Such regulations and restrictions could cause delays and impose additional costs
and restrictions on Pogo's properties and on their waste disposal activities.
If new laws or regulations
that significantly restrict hydraulic fracturing and related activities are adopted, such laws could make it more difficult or costly
to perform fracturing to stimulate production from tight formations. In addition, if hydraulic fracturing is further regulated at the
federal or state level, fracturing activities could become subject to additional permitting and financial assurance requirements, more
stringent construction specifications, increased monitoring, reporting and recordkeeping obligations, plugging and abandonment requirements
and also to attendant permitting delays and potential increases in costs. Such legislative changes could cause Pogo to incur substantial
compliance costs, and compliance or the consequences of any failure to comply could have a material adverse effect on Pogo's financial
condition and results of operations. At this time, it is not possible to estimate the impact on Pogo's business of newly enacted
or potential federal or state legislation governing hydraulic fracturing.
Endangered Species Act
The ESA restricts activities
that may affect endangered and threatened species or their habitats. The designation of previously unidentified endangered or threatened
species could cause E&P operators to incur additional costs or become subject to operating delays, restrictions or bans in the affected
areas. Recently, there have been renewed calls to review protections currently in place for the dunes sagebrush lizard, whose habitat
includes parts of the Permian Basin, and to reconsider listing the species under the ESA. For example, in October 2019 environmental
groups filed a lawsuit against the FWS seeking to compel the agency to list the species under the ESA, and in July 2020, FWS agreed
to initiate a 12-month review to determine whether listing the species was warranted, which determination remains outstanding. Additionally,
in June 2021, the FWS proposed to list two distinct population sections of the Lesser Prairie Chicken, including one in portions
of the Permian Basin, under the ESA, which was finalized on November 25, 2022. To the extent species are listed under the ESA
or similar state laws, or previously unprotected species are designated as threatened or endangered in areas where Pogo's properties
are located, operations on those properties could incur increased costs arising from species protection measures and face delays or limitations
with respect to production activities thereon.
Employee Health and Safety
Operations on Pogo's
properties are subject to a number of federal and state laws and regulations, including the federal Occupational Safety and Health Act
("OSHA") and comparable state statutes, whose purpose is to protect the health and safety of workers. In addition, the OSHA
hazard communication standard, the EPA community right-to-know regulations under Title III of the federal Superfund Amendment
and Reauthorization Act, and comparable state statutes require that information be maintained concerning hazardous materials used or produced
in operations and that this information be provided to employees, state and local government authorities and citizens.
Other Regulation of the Crude Oil and Natural
Gas Industry
The crude oil and natural
gas industry is extensively regulated by numerous federal, state and local authorities. Legislation affecting the crude oil and natural
gas industry is under constant review for amendment or expansion, frequently increasing the regulatory burden. Also, numerous departments
and agencies, both federal and state, are authorized by statute to issue rules and regulations that are binding on the crude oil and natural
gas industry and its individual members, some of which carry substantial penalties for failure to comply. Although the regulatory burden
on the crude oil and natural gas industry increases the cost of doing business, these burdens generally do not affect us any differently
or to any greater or lesser extent than they affect other companies in the industry with similar types, quantities and locations of production.
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The availability, terms and
conditions and cost of transportation significantly affect sales of crude oil and natural gas. The interstate transportation of crude
oil and natural gas and the sale for resale of natural gas is subject to federal regulation, including regulation of the terms, conditions
and rates for interstate transportation, storage and various other matters, primarily by the Federal Energy Regulatory Commission ("FERC").
Federal and state regulations govern the price and terms for access to crude oil and natural gas pipeline transportation. FERC's
regulations for interstate crude oil and natural gas transmission in some circumstances may also affect the intrastate transportation
of crude oil and natural gas.
Pogo cannot predict whether
new legislation to regulate crude oil and natural gas might be proposed, what proposals, if any, might actually be enacted by the U.S. Congress
or the various state legislatures, and what effect, if any, the proposals might have on its operations. Sales of crude oil and condensate
are not currently regulated and are made at market prices.
Drilling and Production
The operations on Pogo's
properties are subject to various types of regulation at the federal, state and local level. These types of regulation include requiring
permits for the drilling of wells, drilling bonds and reports concerning operations. The state, and some counties and municipalities,
in which Pogo operates also regulate one or more of the following:
●
the
location of wells;
●
the
method of drilling and casing wells;
●
the
timing of construction or drilling activities, including seasonal wildlife closures;
●
the
rates of production or "allowables";
●
the
surface use and restoration of properties upon which wells are drilled;
●
the
plugging and abandoning of wells;
●
and
notice to, and consultation with, surface owners and other third parties.
State laws regulate the size
and shape of drilling and spacing units or proration units governing the pooling of crude oil and natural gas properties. Some states
allow forced pooling or integration of tracts to facilitate exploration while other states rely on voluntary pooling of lands and leases.
In some instances, forced pooling or unitization may be implemented by third parties and may reduce Pogo's interest in the unitized
properties. In addition, state conservation laws establish maximum rates of production from crude oil and natural gas wells, generally
prohibit the venting or flaring of natural gas and impose requirements regarding the ratability of production. These laws and regulations
may limit the amount of crude oil and natural gas that the Pogo's properties can produce from Pogo's wells or limit the number
of wells or the locations at which can be drill. Moreover, each state generally imposes a production or severance tax with respect to
the production and sale of crude oil and natural gas within its jurisdiction. States do not regulate wellhead prices or engage in other
similar direct regulation, but Pogo cannot assure you that they will not do so in the future. The effect of such future regulations may
be to limit the amounts of crude oil and natural gas that may be produced from Pogo's wells, negatively affect the economics of
production from these wells or to limit the number of locations operators can drill.
Federal, state and local regulations
provide detailed requirements for the abandonment of wells, closure or decommissioning of production facilities and pipelines and for
site restoration in areas where Pogo operates. The U.S. Army Corps of Engineers and many other state and local authorities also have
regulations for plugging and abandonment, decommissioning and site restoration. Although the U.S. Army Corps of Engineers does not
require bonds or other financial assurances, some state agencies and municipalities do have such requirements.
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Natural Gas Sales and Transportation
FERC has jurisdiction over
the transportation and sale for resale of natural gas in interstate commerce by natural gas companies under the Natural Gas Act of 1938
("NGA") and the Natural Gas Policy Act of 1978. Since 1978, various federal laws have been enacted which have resulted
in the complete removal of all price and non-price controls for sales of domestic natural gas sold in "first sales."
Under the Energy Policy Act of 2005,
FERC has substantial enforcement authority to prohibit the manipulation of natural gas markets and enforce its rules and orders, including
the ability to assess substantial civil penalties. FERC also regulates interstate natural gas transportation rates and service conditions
and establishes the terms under which Pogo's properties may use interstate natural gas pipeline capacity, as well as the revenues
received for release of natural gas pipeline capacity. Interstate pipeline companies are required to provide nondiscriminatory transportation
services to producers, marketers and other shippers, regardless of whether such shippers are affiliated with an interstate pipeline company.
FERC's initiatives have led to the development of a competitive, open access market for natural gas purchases and sales that permits
all purchasers of natural gas to buy gas directly from third-party sellers other than pipelines.
Gathering service, which occurs
upstream of jurisdictional transmission services, is regulated by the states onshore and in state waters. Section 1(b) of the
NGA exempts natural gas gathering facilities from regulation by FERC under the NGA. FERC has in the past reclassified certain jurisdictional
transmission facilities as non-jurisdictional gathering facilities, which may increase the operators' costs of transporting
gas to point-of-sale locations. This may, in turn, affect the costs of marketing natural gas that Pogo's properties produce.
Historically, the natural
gas industry was more heavily regulated; therefore, Pogo cannot guarantee that the regulatory approach currently pursued by FERC and the
U.S. Congress will continue indefinitely into the future nor can Pogo determine what effect, if any, future regulatory changes might
have on its natural gas related activities.
Crude Oil Sales and Transportation
Crude oil sales are affected
by the availability, terms and cost of transportation. The transportation of crude oil in common carrier pipelines is also subject to
rate regulation. FERC regulates interstate crude oil pipeline transportation rates under the Interstate Commerce Act and intrastate crude
oil pipeline transportation rates are subject to regulation by state regulatory commissions. The basis for intrastate crude oil pipeline
regulation, and the degree of regulatory oversight and scrutiny given to intrastate crude oil pipeline rates, varies from state to state.
Insofar as effective interstate and intrastate rates are equally applicable to all comparable shippers, Pogo believes that the regulation
of crude oil transportation rates will not affect its operations in any materially different way than such regulation will affect the
operations of its competitors.
Further, interstate and intrastate
common carrier crude oil pipelines must provide service on a non-discriminatory basis. Under this open access standard, common carriers
must offer service to all similarly situated shippers requesting service on the same terms and under the same rates. When crude oil pipelines
operate at full capacity, access is governed by pro-rationing provisions set forth in the pipelines' published tariffs. Accordingly,
Pogo believes that access to crude oil pipeline transportation services of Pogo's properties will not materially differ from Pogo's
competitors' access to crude oil pipeline transportation services.
State Regulation
New Mexico regulates the drilling
for, and the production, gathering and sale of, crude oil and natural gas, including imposing severance taxes and requirements for obtaining
drilling permits. New Mexico currently imposes a 3.75% severance tax on the market value of crude oil and natural gas production as well
as other production taxes for conservation, schools, ad valorem, and equipment. Combined, these taxes amount to 8-9% tax on market
value of crude and natural gas production. States also regulate the method of developing new fields, the spacing and operation of wells
and the prevention of waste of crude oil and natural gas resources.
States may regulate rates
of production and may establish maximum daily production allowables from crude oil and natural gas wells based on market demand or resource
conservation, or both. States do not regulate wellhead prices or engage in other similar direct economic regulation, but Pogo cannot assure
you that they will not do so in the future. Should direct economic regulation or regulation of wellhead prices by the states increase,
this could limit the amount of crude oil and natural gas that may be produced from wells on Pogo's properties and the number of
wells or locations Pogo's properties can drill.
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The petroleum industry is
also subject to compliance with various other federal, state and local regulations and laws. Some of those laws relate to resource conservation
and equal employment opportunity. Pogo does not believe that compliance with these laws will have a material adverse effect on its business.
Pogo Title to Properties
Prior to completing an acquisition
of a target or working interests, Pogo performs a title review on each tract to be acquired. Pogo's title review is meant to confirm
the working interests owned by a prospective seller, the property's lease status and royalty amount as well as encumbrances or other
related burdens. As a result, title examinations have been obtained on substantially all of Pogo's properties.
In addition to Pogo's
initial title work, Pogo often will conduct a thorough title examination prior to leasing any new acres, and/or drilling a well. Should
any further title work uncover any further title defects, Pogo will perform curative work with respect to such defects. Pogo generally
will not commence drilling operations on a property until any material title defects on such property have been cured.
Pogo believes that the title
to its assets is satisfactory in all material respects. Although title to these properties is in some cases subject to encumbrances, such
as customary royalty interest generally retained in connection with the acquisition of crude oil and gas interests, non-participating royalty
interests and other burdens, easements, restrictions or minor encumbrances customary in the crude oil and natural gas industry, Pogo believes
that none of these encumbrances will materially detract from the value of these properties or from its interest in these properties.
Pogo Competition
The crude oil and natural
gas business is highly competitive; Pogo primarily competes with companies for the acquisition of targets with high percentage of working
interests underlying crude oil and natural gas leases. Many of Pogo's competitors not only own and acquire working interests but
also explore for and produce crude oil and natural gas and, in some cases, carry on midstream and refining operations and market petroleum
and other products on a regional, national or worldwide basis. By engaging in such other activities, Pogo's competitors may be able
to develop or obtain information that is superior to the information that is available to us. In addition, certain of Pogo's competitors
may possess financial or other resources substantially larger than Pogo possesses. Pogo's ability to acquire additional working
interests and properties and to discover reserves in the future will be dependent upon its ability to evaluate and select suitable properties
and to consummate transactions in a highly competitive environment.
In addition, crude oil and
natural gas products compete with other forms of energy available to customers, primarily based on price. These alternate forms of energy
include electricity, coal, and fuel oils. Changes in the availability or price of crude oil and natural gas or other forms of energy,
as well as business conditions, conservation, legislation, regulations, and the ability to convert to alternate fuels and other forms
of energy may affect the demand for crude oil and natural gas.
Pogo Seasonality of Business
Weather conditions affect
the demand for, and prices of, natural gas and can also delay drilling activities, disrupting Pogo's overall business plans. Additionally,
Pogo's properties are located in areas adversely affected by seasonal weather conditions, primarily in the winter and spring. During
periods of heavy snow, ice or rain, Pogo may be unable to move their equipment between locations, thereby reducing its ability to operate
Pogo's wells, reducing the amount of crude oil and natural gas produced from the wells on Pogo's properties during such times.
Additionally, extended drought conditions in the areas in which Pogo's properties are located could impact its ability to source
sufficient water or increase the cost for such water. Furthermore, demand for natural gas is typically higher during the winter, resulting
in higher natural gas prices for Pogo's natural gas production during its first and fourth quarters. Certain natural gas users utilize
natural gas storage facilities and purchase some of their anticipated winter requirements during the summer, which can lessen seasonal
demand fluctuations. Seasonal weather conditions can limit drilling and producing activities and other crude oil and natural gas operations
in Pogo's operating areas. Due to these seasonal fluctuations, Pogo's results of operations for individual quarterly periods
may not be indicative of the results that it may realize on an annual basis.
Employees and Human Working Capital
We have salaried and regular
pay employees in the field as well as management at our corporate offices. As of December 31, 2024, we employed seven full-time salaried
and regular pay field individuals under no ongoing employment contracts who provided direct support to Pogo's operations. As of
December 31, 2024, we employed five full-time salaried employees at our corporate offices, all of which have ongoing employment contracts.
None of these employees are covered by collective bargaining agreements.
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Human capital management is
critical to our ongoing business success, which requires investing in our people. Our aim is to create a highly engaged and motivated
workforce where employees are inspired by leadership, engaged in purpose-driven, meaningful work and have opportunities for growth and
development. We are an equal opportunity employer and we are fundamentally committed to creating and maintaining a work environment in
which employees are treated with respect and dignity. All human resources policies, practices and actions related to hiring, promotion,
compensation, benefits and termination are administered in accordance with the principles of equal employment opportunity and other legitimate
criteria without regard to race, color, religion, sex, sexual orientation, gender expression or identity, ethnicity, national origin,
ancestry, age, mental or physical disability, genetic information, any veteran status, any military status or application for military
service, or membership in any other category protected under applicable laws.
An effective approach to human
capital management requires that we invest in talent, development, culture and employee engagement. We aim to create an environment where
our employees are encouraged to make positive contributions and fulfill their potential.
Our Board of Directors is
also actively involved in reviewing and approving executive compensation, selections and succession plans so that we have leadership in
place with the requisite skills and experience to deliver results the right way.
Emerging Growth Company
We are an "emerging
growth company," as defined in the JOBS Act. As such, we are eligible to take advantage of certain exemptions from various reporting
requirements that are applicable to other public companies that are not "emerging growth companies" including, but not limited
to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced
disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements
of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously
approved. If some investors find our securities less attractive as a result, there may be a less active trading market for our securities
and the prices of our securities may be more volatile.
In addition, Section 107
of the JOBS Act also provides that an "emerging growth company" can take advantage of the extended transition period provided
in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an "emerging
growth company" can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.
We intend to take advantage of the benefits of this extended transition period. Accordingly, the information we provide to you may be
different than you might get from other public companies in which you hold securities.
We will remain an emerging
growth company until the earliest of (i) the last day of the fiscal year following the fifth anniversary of the closing of our Initial
Public Offering, or December 31, 2027, (ii) the last day of the fiscal year in which we have total annual gross revenue of at least
$1.07 billion, (iii) the last day of the fiscal year in which we are deemed to be a "large accelerated filer" as
defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), which would occur
if the market value of our common stock held by non-affiliates exceeded $700.0 million as of the last business day of the second
fiscal quarter of such year or (iv) the date on which we have issued more than $1.00 billion in non-convertible debt securities
during the prior three-year period.
Facilities
We currently maintain our
executive offices at 3730 Kirby Drive, Suite 1200, Houston, Texas 77098. We recently leased a space at 10810 Old Katy Rd, Katy, TX 77494
just beyond the Houston city limits for our engineering and geological center. The cost for the two spaces combined are approximately
$3,000 per month. We consider our current office space adequate for our current operations.
Legal Proceedings
There is no material litigation,
arbitration or governmental proceeding currently pending against us or any members of our management team in their capacity as such.
Corporate Information
Our executive offices are located at 3730 Kirby
Drive, Suite 1200, Houston, Texas 77098, and our telephone number is (713) 834-1145.
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Management's
Discussion and Analysis of
Financial Condition and Results of Operations OF EON
References in this section
to "we," "us", "EON", the "Successor" or the "Company" refer to EON Resources
Inc. (f/k/a HNR Acquisition Corp) (and the business of Pogo which became the business of the Company after giving effect to the Purchase).
References to our "management" or our "management team" refer to our officers and directors, and references to
the "Sponsor" refer to HNRAC Sponsors, LLC. "Predecessor" refers to the historical business of Pogo prior to the
Purchase on November 15, 2023. The following discussion and analysis of the Company's financial condition and results of operations
should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this prospectus. Certain information
contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Special Note Regarding Forward-Looking
Statements
This prospectus includes
"forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Exchange Act that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially
from those expected and projected. All statements, other than statements of historical fact included in this prospectus including, without
limitation, statements in this "Management's Discussion and Analysis of Financial Condition and Results of Operations"
regarding the Company's financial position, business strategy and the plans and objectives of management for future operations,
are forward-looking statements. Words such as "expect," "believe," "anticipate," "intend,"
"estimate," "seek" and variations and similar words and expressions are intended to identify such forward-looking
statements. Such forward-looking statements relate to future events or future performance, but reflect management's current beliefs,
based on information currently available. A number of factors could cause actual events, performance or results to differ materially from
the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could
cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors section
of the Company's Annual Report on Form 10-K filed with the SEC. The Company's securities filings can be accessed
on the EDGAR section of the SEC's website at www.sec.gov. 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.
Overview
We are an independent oil
and natural gas company based in Texas and formed in 2017 that is focused on the acquisition, development, exploration, production and
divestiture of oil and natural gas properties in the Permian Basin. The Permian Basin is located in west Texas and southeastern New Mexico
and is characterized by high oil and liquids-rich natural gas content, multiple vertical and horizontal target horizons, extensive production
histories, long-lived reserves and historically high drilling success rates. Pogo's properties are in the Grayburg-Jackson Field
in Eddy County, New Mexico, which is a sub-area of the Permian Basin. Pogo focuses primarily on production through waterflooding recovery
methods.
83
Pogo is a limited liability
company and is not subject to federal and state income taxes. However, it must file informational tax returns and all taxable income or
loss flows through to the owners in their individual tax returns.
The Company's assets
as mentioned above consist of contiguous leasehold positions of approximately 13,700 gross (13,700 net) acres with an average working
interest of 100%. We operate 100% of the net acreage across the Company's assets, all of which is net operated acreage of vertical
wells with average depths of approximately 3,810 feet.
Our average daily production
for the nine months ended September 30, 2024 was 814 barrel of oil equivalent ("BOE") per day. Our average daily production
for the year ended December 31, 2023, was 1,022 BOE per day. The decrease in production is due to an increase in well downtime, water
injection flowlines that needed repair or replacement, and the conveyance of the 10% Override royalty interest to Pogo Royalty.
Impact of Coronavirus ("COVID-19")
The COVID-19 pandemic resulted
in a severe worldwide economic downturn, significantly disrupting the demand for oil throughout the world, and created significant volatility,
uncertainty and turmoil in the oil and gas industry. The decrease in demand for oil, combined with pressures on the global supply-demand
balance for oil and related products, resulted in oil prices declining significantly in late February 2020. Since mid-2020, oil prices
have improved, with demand steadily increasing despite the uncertainties surrounding the COVID-19 variants, which have continued to inhibit
a full global demand recovery. In addition, worldwide oil inventories are, from a historical perspective, very low and supply increases
from the Organization of the Petroleum Exporting Countries ("OPEC"), Russia and other oil producing nations are not expected
to be sufficient to meet forecasted oil demand growth in 2023, with many OPEC countries not able to produce at their OPEC agreed upon
quota levels due to their lack of capital investments over the past few years in developing incremental oil supplies.
Global oil price levels will
ultimately depend on various factors and consequences beyond the Company's control, such as: (i) the effectiveness of responses
to combat the COVID-19 virus and their impact on domestic and worldwide demand, (ii) the ability of OPEC, Russia and other oil producing
nations to manage the global oil supply, (iii) the timing and supply impact of any Iranian sanction relief on Iran's ability to
export oil, (iv) additional actions by businesses and governments in response to the pandemic, (v) the global supply chain constraints
associated with manufacturing delays, and (vi) political stability of oil consuming countries.
We continue to assess the
impact of the COVID-19 pandemic on our company and may modify our response as the impact of COVID-19 continues to evolve.
Certain prior year financial
statements are not comparable to our current year financial statements due to the adoption of fresh start accounting as a result of the
Acquisition. References to "Successor" relate to the financial position and results of operations of EON Resources Inc. subsequent
to November 15, 2023. References to "Predecessor" relate to the financial position and results of operations of EON Resources
Inc. prior to, and including, November 14, 2023.
Selected Factors That Affect Our Operating
Results
Our reven
ues,
cash flows from operations and future growth depend substantially upon:
●
the
                                            timing and success of production and development activities;
●
the
                                            prices for oil and natural gas;
●
the
                                            quantity of oil and natural gas production from our wells;
●
changes
                                            in the fair value of the derivative instruments we use to reduce our exposure to fluctuations
                                            in the price of oil and natural gas;
●
our
                                            ability to continue to identify and acquire high-quality acreage and development opportunities;
                                            and
●
the
                                            level of our operating expenses.
84
In addition to the factors
that affect companies in our industry generally, the location of substantially all of our acreage discussed above subjects our operating
results to factors specific to these regions. These factors include the potential adverse impact of weather on drilling, production and
transportation activities, particularly during the winter and spring months, as well as infrastructure limitations, transportation capacity,
regulatory matters and other factors that may specifically affect one or more of these regions.
The price at which our oil
and natural gas production are sold typically reflects either a premium or discount to the New York Mercantile Exchange ("NYMEX")
benchmark price. Thus, our operating results are also affected by changes in the oil price differentials between the applicable benchmark
and the sales prices we receive for our oil production. Our oil price differential to the NYMEX benchmark price during the nine months
ended September 30, 2024 and 2023, was $(2.07) and $(3.22) per barrel, respectively. Our natural gas price differential during the nine
months ended September 30, 2024 and 2023, was $0.04 and $0.03 per one thousand cubic feet ("Mcf"), respectively. Fluctuations
in our price differentials and realizations are due to several factors such as gathering and transportation costs, takeaway capacity relative
to production levels, regional storage capacity, gain/loss on derivative contracts and seasonal refinery maintenance temporarily depressing
demand.
Market Conditions
The price that we receive
for the oil and natural gas we produce is largely a function of market supply and demand. Because our oil and gas revenues are heavily
weighted toward oil, we are more significantly impacted by changes in oil prices than by changes in the price of natural gas. World-wide
supply in terms of output, especially production from properties within the United States, the production quota set by OPEC, and the strength
of the U.S. dollar can adversely impact oil prices.
Historically, commodity prices
have been volatile, and we expect the volatility to continue in the future. Factors impacting the future oil supply balance are world-wide
demand for oil, as well as the growth in domestic oil production.
Prices for various quantities
of natural gas and oil that we produce significantly impact our revenues and cash flows. The following table lists average NYMEX prices
for oil and natural gas for the three and nine months ended September 30, 2024 and 2023.
For the three months ended
September 30,
2024
2023
Average NYMEX Prices
(1)
Oil (per Bbl)
$
76.24
$
82.30
Natural gas (per Mcf)
$
2.11
$
2.59
For the nine months ended
September 30,
2024
2023
Average NYMEX Prices
(1)
Oil (per Bbl)
$
78.50
$
77.38
Natural gas (per Mcf)
$
2.11
$
2.47
(1)
Based on average NYMEX closing prices.
For the nine months ended
September 30, 2024, the average NYMEX oil pricing was $78.50 per barrel of oil or 7% lower than the average NYMEX price per barrel for
the nine months ended September 30, 2023. Our settled derivatives decreased our realized oil price per barrel by $2.56 and $3.47 in the
nine months ended September 30, 2024, and 2023, respectively. Our average realized oil price per barrel after reflecting settled derivatives
and location differentials was $77.12 and $74.23 for the three months ended September 30, 2024 and 2023, respectively. Our average realized
oil price per barrel after reflecting settled derivatives and location differentials was $73.87 and $73.03 for the nine months ended September
30, 2024 and 2023, respectively.
The average NYMEX natural gas pricing for the
nine months ended September 30, 2024, was $2.11 per Mcf, or 14% lower than the average NYMEX price of $2.47 per Mcf for the nine months
ended September 30, 2023.
Pogo Royalty Overriding Royalty Interest Transaction
Effective July 1, 2023, the
Predecessor transferred to Pogo Royalty, a related party to the Predecessor, an assigned and undivided overriding royalty interest ("ORRI")
equal in amount to ten percent (10%) of the Company's interest all oil, gas and minerals in, under and produced from each lease.
The consideration received for the 10% ORRI was $10. Thus, a loss of $816,011 was recorded as a result of the conveyance in the previous
year. Additionally, because of this transaction, our reserve balance was decreased as well our current net production volumes and revenues.
85
Three months ended September 30, 2024 (Successor)
Compared to Three months ended September 30, 2023
The following table sets forth selected operating
data for the periods indicated. Average sales prices are derived from accrued accounting data for the relevant period indicated.
Three
Months
Ended
September
30,
2024
Three
Months
Ended
September
30,
2023
Successor
Predecessor
Revenues
Crude oil
$
5,275,254
$
6,314,104
Natural gas and natural gas liquids
89,978
256,741
Gain (loss) on derivative instruments, net
1,900,662
(1,436,100
)
Other revenue
98,452
143,714
Total revenues
$
7,364,346
5,278,459
Average sales prices:
Oil (per Bbl)
$
78.74
$
82.03
Effect on gain (loss) of settled oil derivatives on average price (per Bbl)
(1.61
)
(7.80
)
Oil net of settled oil derivatives (per Bbl)
77.13
74.23
Natural gas (per Mcf)
$
1.55
$
2.83
Realized price on a BOE basis excluding settled commodity derivatives
$
69.98
$
71.35
Effect of gain (loss) on settled commodity derivatives on average price (per BOE)
(1.41
)
(6.52
)
Realized price on a BOE basis including settled commodity derivatives
$
68.57
$
64.83
Expenses
Production taxes, transportation and processing
489,524
602,449
Lease operating
2,136,732
2,449,140
Depletion, depreciation and amortization
507,626
426,838
Accretion of asset retirement obligations
10,395
200,789
General and administrative
2,235,263
981,751
Total expenses
5,379,540
4,660,967
Costs and expenses (per BOE):
Production taxes, transportation, and processing
$
6.39
$
6.54
Lease operating expenses
27.87
26.60
Depreciation, depletion, and amortization expense
6.62
4.64
Accretion of asset retirement obligations
0.14
2.18
General and administrative
29.16
10.66
Net producing wells at period-end
342
341
Oil and Natural Gas Sales
Our revenues vary from year
to year primarily as a result of changes in realized commodity prices and production volumes. For the three months ended September 30,
2024, our oil and natural gas sales decreased 18% from the three months ended September 30, 2023, driven by a 6% increase in realized
prices, excluding the effect of settled commodity derivatives, and a 17% decrease in production volumes, and $1,900,662 in derivative
instrument gains in the three months ended September 30, 2024. Realized production from oil and gas properties decreased due to the sale
of the ORRI of 10% by the Predecessor in July 2023 and actual decrease in production due to an increase in well downtime, and the impact
of water injection flowlines that needed repair or replacement.
86
Production for the comparable periods is set forth
in the following table:
For the Three Months Ended
September 30,
2024
2023
Production:
Successor
Predecessor
Oil (MBbl)
67
77
Natural gas (MMcf)
58
91
Total (MBOE)
(1)
77
92
Average daily production:
Oil (Bbl)
746
855
Natural gas (Mcf)
647
1,007
Total (BOE)
(1)
854
1,023
(1)
Natural gas is converted to BOE at the rate of one-barrel equals six Mcf based upon the approximate relative energy content of oil and natural gas, which is not necessarily indicative of the relationship of oil and natural gas prices.
Derivative Contracts
We enter into commodity derivatives
instruments to manage the price risk attributable to future oil production. We recorded a gain on derivative contracts of $1,900,662 for
the three months ended September 30, 2024, compared to a loss of $1,436,100 for the three months ended September 30, 2023. Higher commodity
prices in the three months ended September 30, 2024, resulted in realized losses of $107,969 compared to realized losses of $600,740 for
the three months ended September 30, 2023. For the three months ended September 30, 2024, unrealized gains were $2,008,631 compared to
unrealized losses of $835,360 for the three months ended September 30, 2023.
For the three months ended
September 30, 2024, our average realized oil price per barrel after reflecting settled derivatives was $77.12 compared to $74.23 for the
three months ended September 30, 2023. For the three months ended September 30, 2024, our settled derivatives decreased our realized oil
price per barrel by $1.61 compared to decreasing the price per barrel by $7.80 for the three months ended September 30, 2023. As of September
30, 2024, we ended the period with a $794,195 net derivative asset compared to a net asset of $467,687 as of December 31, 2023.
Other Revenue
Other revenue was $98,452 for the three months
ended September 30, 2024, compared to $143,714 for the three months ended September 30, 2023. The revenue is related to providing water
services to a third party. The contract is for one year starting on September 1, 2022, and can be renewed by mutual agreement.
Lease Operating Expenses
Lease operating expenses were
$2,136,732 for the three months ended September 30, 2024, compared to $2,449,140 for the three months ended September 30, 2023. On a per
unit basis, production expenses increased 4.8% from $26.60 per BOE for the three months ended September 30, 2023, to $27.87 per BOE for
the three months ended September 30, 2024, due primarily to increases in proactive maintenance activities.
87
Production Taxes, Transportation and
Processing
We pay production taxes, transportation
and processing costs based on realized oil and natural gas sales. Production taxes, transportation and processing costs were $489,524
for the three months ended September 30, 2024, compared to $602,449 for the three months ended September 30, 2023. As a percentage of
oil and natural gas sales, these costs were 9% and 9% in the three months ended September 30, 2024, and 2023, respectively. Production
taxes, transportation, and processing as a percent of total oil and natural gas sales are consistent with historical trends.
Depletion, Depreciation and Amortization
Depletion, depreciation and
amortization ("DD&A") was $507,626 for the three months ended September 30, 2024, compared to $426,838 for the three months
ended September 30, 2023. DD&A was $6.62 per BOE for the three months ended September 30, 2024 compared to $4.64 per BOE for the three
months ended September 30, 2023. The aggregate increase in DD&A expense for the three months ended September 30, 2024, compared to
the three months ended September 30, 2023, was driven by the increase in the oil and gas properties balance due the recognition of the
reserves at fair value as a result of the acquisition of the Pogo business by us on November 15, 2023.
Accretion of Asset Retirement Obligations
Accretion expense was $10,395
for the three months ended September 30, 2024, compared to $200,789 for the three months ended September 30, 2023. Accretion expense was
$0.14 per BOE for the three months ended September 30, 2024, compared to $2.18 per BOE for the three months ended September 30, 2023.
The aggregate decrease in accretion expense for the three months ended September 30, 2024, compared to the three months ended September
30, 2023, was driven by changes in certain assumptions, specifically the inflation factor and discount rate as a result of the acquisition
date where we revised our estimates as part of its fair value estimates for the acquired business on November 15, 2023.
General and Administrative
General and administrative
expenses were $2,235,263 for the three months ended September 30, 2024, compared to $981,751 for the three months ended September 30,
2023. The increase in general and administrative expenses is primarily due to increased cost of outsourced legal, professional, and accounting
services from being a public company, and stock-based compensation in the current period of $326,995.
Interest Expense and amortization of financing
costs
Interest expense was $1,841,848
for the three months ended September 30, 2024, compared to $554,262 for the three months ended September 30, 2023. The Successor period
interest expense is driven by the Senior Secured term loan entered into as part of the Closing, and the Private Notes Payable. The Predecessor
interest expense for the three months ended September 30, 2023 relates to the Predecessor's revolving credit facility outstanding
and an increase in the weighted average interest rate. This revolving credit facility was not assumed in the Acquisition. Amortization
of financing costs was $507,701 and was primarily associated with discount on our Private Notes Payable.
Change in fair value of forward purchase agreement
The change in fair value of
forward purchase agreement consisted of a loss of $4,209,294 for the three months ended September 30, 2024 for the Successor related to
the inputs used in our fair value estimate of the FPA Put Option, primarily the decline in our stock price during the three months ended
September 30, 2024. The key inputs to the fair value estimate include our stock price, which declined during the Successor period, and
the likelihood, timing and price of a potential dilutive offering.
Change in fair value of warrant liabilities
The change in fair value of
warrant liabilities consisted of a loss of $137,911 for the three months ended September 30, 2024 related to fluctuations in the trading
price of our warrants, a portion of which are accounted for as liabilities due to the redemption provisions in those issued to Private
Note holders.
88
Nine months ended September 30, 2024 (Successor)
Compared to nine months ended September 30, 2023
The following table sets forth selected operating
data for the periods indicated. Average sales prices are derived from accrued accounting data for the relevant period indicated.
Nine
Months
Ended
September 30,
2024
Nine
Months
Ended
September 30,
2023
Successor
Predecessor
Revenues
Crude oil
$
15,132,363
$
19,814,847
Natural gas and natural gas liquids
396,670
719,383
Gain (loss) on derivative instruments, net
(180,063
)
(673,057
)
Other revenue
359,270
461,435
Total revenues
$
15,708,240
20,322,608
Average sales prices:
Oil (per Bbl)
$
76.43
$
76.50
Effect on gain (loss) of settled oil derivatives on average price (per Bbl)
(2.56
)
(3.47
)
Oil net of settled oil derivatives (per Bbl)
73.87
73.03
Natural gas (per Mcf)
$
2.14
$
2.61
Realized price on a BOE basis excluding settled commodity derivatives
67.86
$
67.34
Effect of gain (loss) on settled commodity derivatives on average price (per BOE)
(2.21
)
(2.95
)
Realized price on a BOE basis including settled commodity derivatives
$
65.65
$
64.39
Expenses
Production taxes, transportation and processing
1,326,789
1,774,310
Lease operating
6,530,431
7,354,304
Depletion, depreciation and amortization
1,506,242
1,285,830
Accretion of asset retirement obligations
83,926
809,423
General and administrative
6,868,749
3,111,130
Total expenses
16,316,137
14,334,997
Costs and expenses (per BOE):
Production taxes, transportation, and processing
$
5.80
$
5.82
Lease operating expenses
28.54
24.12
Depreciation, depletion, and amortization expense
6.58
4.22
Accretion of asset retirement obligations
0.37
2.65
General and administrative
30.02
10.20
Net producing wells at period-end
342
341
Oil and Natural Gas Sales
For the Nine Months Ended
September 30,
2024
2023
Production:
Oil (MBbl)
198
259
Natural gas (MMcf)
185
275
Total (MBOE)
(1)
229
305
Average daily production:
Oil (Bbl)
732
959
Natural gas (Mcf)
686
1,021
Total (BOE)
(1)
846
1,129
(1)
Natural gas is converted to BOE at the rate of one-barrel equals six Mcf based upon the approximate relative energy content of oil and natural gas, which is not necessarily indicative of the relationship of oil and natural gas prices.
89
Derivative Contracts
We enter into commodity derivatives
instruments to manage the price risk attributable to future oil production. We recorded a loss on derivative contracts of $180,063 for
the nine months ended September 30, 2024, compared to a loss of $673,057 for the nine months ended September 30, 2023. Higher commodity
prices in the nine months ended September 30, 2024, resulted in realized losses of $506,571 compared to realized losses of $899,395 for
the nine months ended September 30, 2023. For the nine months ended September 30, 2024, unrealized gains were $326,508 compared to unrealized
gains of $226,338 for the nine months ended September 30, 2023.
For the nine months ended
September 30, 2024, our average realized oil price per barrel after reflecting settled derivatives was $73.87 compared to $73.03, for
the nine months ended September 30, 2023. For the nine months ended September 30, 2024, our settled derivatives decreased our realized
oil price per barrel by $2.56 compared to decreasing the price per barrel by $3.47 for the nine months ended September 30, 2023. As of
September 30, 2024, we ended the period with a $794,195 net derivative asset compared to a net asset of $467,687 as of December 31, 2023.
Other Revenue
Other revenue was $359,270
for the nine months ended September 30, 2024, compared to $461,435 for the nine months ended September 30, 2023. The revenue is related
to providing water services to a third party. The contract is for one year starting on September 1, 2022, and can be renewed by mutual
agreement.
Lease Operating Expenses
Lease operating expenses were
$6,530,431 for the nine months ended September 30, 2024, compared to $7,354,304 for the nine months ended September 30, 2023. On a per
unit basis, production expenses increased 18% from $24.12 per BOE for the nine months ended September 30, 2023, to $28.54 per BOE for
the nine months ended September 30, 2024, due primarily to increases in proactive maintenance activities.
Production Taxes, Transportation and Processing
Depletion, depreciation and
amortization ("DD&A") was $1,506,242 for the nine months ended September 30, 2024, compared to $1,285,830 for the nine
months ended September 30, 2023. DD&A was $6.58 per BOE for the nine months ended September 30, 2024 compared to $4.22 per BOE for
the nine months ended September 30, 2023. The aggregate increase in DD&A expense for the nine months ended September 30, 2024, compared
to the nine months ended September 30, 2023, was driven by the increase in the oil and gas properties balance due to the recognition of
the reserves at fair value as a result of the acquisition of the Pogo business by us on November 15, 2023.
Accretion of Asset Retirement Obligations
Accretion expense was $83,926
for the nine months ended September 30, 2024, compared to $809,423 for the nine months ended September 30, 2023. Accretion expense was
$0.37 per BOE for the nine months ended September 30, 2024, compared to $2.65 per BOE for the nine months ended September 30, 2023. The
aggregate decrease in accretion expense for the nine months ended September 30, 2024, compared to the nine months ended September 30,
2023, was driven by changes in certain assumptions, specifically the inflation factor and discount rate as a result of the acquisition
date where we revised our estimates as part of its fair value estimates for the acquired business on November 15, 2023
General and Administrative
General and administrative
expenses were $6,868,749 for the nine months ended September 30, 2024, compared to $3,111,130 for the nine months ended September 30,
2023. The increase for general and administrative expenses is primarily due to increased cost of outsourced legal, professional, and accounting
services from being a public company, and stock-based compensation in the current period of $1,516,933.
Interest Expense and amortization of financing
costs
Interest expense was $5,732,747
for the nine months ended September 30, 2024, compared to $1,429,200 for the nine months ended September 30, 2023. The Successor period
interest expense is driven by the Senior Secured Term loan entered into as part of the Closing, and the Private Notes Payable. The Predecessor
interest expense for the nine months ended September 30, 2023 relates to the Predecessor's revolving credit facility outstanding
and an increase in the weighted average interest rate. This revolving credit facility was not assumed in the Acquisition. Amortization
of financing costs was $1,982,958 and was primarily associated with discount on our Private Notes Payable.
Change in fair value of forward purchase agreement
The change in fair value of
forward purchase agreement consisted of a loss of $4,534,766 for the nine months ended September 30, 2024 for the Successor related to
the inputs used in our fair value estimate of the FPA Put Option, primarily due to the decline in our stock price on a year to date basis.
The key inputs to the fair value estimate include our stock price, which declined during the Successor period, and the likelihood, timing
and price of a potential dilutive offering.
Change in fair value of warrant liabilities
The change in fair value
of warrant liabilities consisted of a loss of $484,799 for the nine months ended September 30, 2024 related to fluctuations in the trading
price of our warrants, a portion of which are accounted for as liabilities due to the redemption provisions in those issued to Private
Note holders.
90
Results of Operations For the Years ended December
31, 2023 and 2022
For the year ended December
31, 2023, 97% and 3% of sales volumes from the assets were attributable to crude and natural gas, respectively. As of December 31, 2023,
the company was continuing development of the Seven River waterflood interval. Further, as of December 31, 2023, the Company owned an
interest in approximately 342 gross (342 net) producing wells.
The following table sets forth
selected operating data for the periods indicated. Average sales prices are derived from accrued accounting data for the relevant period
indicated.
Successor
Predecessor
November 15,
2023 to
December 31,
2023
January 1,
2023 to
November 14,
2023
Year Ended
December 31,
2022
Revenues
Crude oil
$
2,513,197
$
22,856,521
$
37,982,367
Natural gas and natural gas liquids
70,918
809,553
1,959,411
Gain (loss) on derivative instruments, net
340,808
51,957
(4,793,790
)
Other revenue
50,738
520,451
255,952
Total revenues
2,975,661
24,238,482
35,403,940
Average sales prices:
Oil (per Bbl)
$
65.11
$
73.58
$
95.66
Effect on gain (loss) of settled oil derivatives on average price (per Bbl)
(2.66
)
0.17
(17.58
)
Oil net of settled oil derivatives (per Bbl)
62.45
73.75
78.09
Natural gas (per Mcf)
2.41
2.48
4.29
Realized price on a BOE basis excluding settled commodity derivatives
59.40
64.84
84.41
Effect of gain (loss) on settled commodity derivatives on average price (per BOE)
(2.36
)
(3.19
)
(14.75
)
Realized price on a BOE basis including settled commodity derivatives
$
57.04
$
61.66
$
69.66
Expenses
Production taxes, transportation and processing
226,062
2,117,800
3,484,477
Lease operating
1,453,367
8,692,752
8,418,739
Depletion, depreciation and amortization
352,127
1,497,749
1,613,402
Accretion of asset retirement obligations
11,062
848,040
1,575,296
General and administrative
3,553,117
3,700,267
2,953,202
Acquisition costs
9,999,860
-
-
Total expenses
15,595,595
16,856,608
18,045,116
Costs and expenses (per BOE):
Production taxes, transportation, and processing
$
5.20
$
5.80
$
7.36
Lease operating expenses
33.41
23.82
17.79
Depreciation, depletion, and amortization expense
8.09
4.10
3.41
Accretion of asset retirement obligations
0.25
2.32
3.33
General and administrative
81.67
10.14
6.24
Net producing wells at period-end
342
342
342
91
Oil and Natural Gas Sales
Our revenues vary from year
to year primarily as a result of changes in realized commodity prices and production volumes. On a combined Successor and Predecessor
basis, for the year ended December 31, 2023, our oil and natural gas sales decreased 34% from the year ended December 31, 2022, driven
by a 24% decrease in realized prices, excluding the effect of settled commodity derivatives, and an 21% decrease in production volumes.
The lower average price in the combined year ended December 31, 2023 compared to 2022, was driven by lower average NYMEX oil and natural
gas prices. Realized production from oil and gas properties decreased due to an increase in well downtime and due to the July 1, 2023
conveyance of the 10% overriding royalty interest to Pogo Royalty.
Production for the comparable
periods is set forth in the following table:
For the year ended
December 31,
2023
2022
Production:
Oil (MBbl)
349
397
Natural gas (MMcf)
356
457
Total (MBOE)
(1)
409
473
Average daily production:
Oil (Bbl)
957
1,088
Natural gas (Mcf)
974
1,252
Total (BOE)
(1)
1,022
1,296
(1)
Natural gas is converted to BOE at the rate of one-barrel equals six Mcf based upon the approximate relative energy content of oil and natural gas, which is not necessarily indicative of the relationship of oil and natural gas prices.
Derivative Contracts
We enter into commodity derivatives
instruments to manage the price risk attributable to future oil production.
We recorded a gain on derivative
contracts of $392,675 on a combined Successor and Predecessor basis for the year ended December 31, 2023 compared to a loss of $4,793,790
for the year ended December 31, 2022 (Predecessor). Lower commodity prices in 2023, resulted in realized losses of $1,266,277 on a combined
Successor and Predecessor basis for the year ended December 31, 2023 compared to realized losses of $6,978,790 for the year ended December
31, 2022. On a combined Successor and Predecessor basis for the year ended December 31, 2023, our average realized oil price per barrel
after reflecting settled derivatives was $73.82, compared to $78.09 the year ended December 31, 2022 (Predecessor).
As of December 31, 2023, we
ended the period with a $467,687 net derivative asset compared to $1,191,354 as of December 31, 2022.
Other Revenue
Other revenue was $571,189
on a combined Successor and Predecessor basis for the year ended December 31, 2023, compared to $255,952 for the year ended December 31,
2022 (Predecessor). The increase is due to a full period related to a new contract that the Predecessor entered into to provide water
services to a third-party effective September 1, 2022.
Lease Operating Expenses
Lease operating expenses were
$10,146,119 on a combined Successor and Predecessor basis for the year ended December 31, 2023, compared to $8,418,739 for the year ended
December 31, 2022. On a per unit basis, production expenses increased 53% from $17.79 per BOE for the combined Successor and Predecessor
year ended December 31, 2023, to $27.20 per BOE for the combined Successor and Predecessor year ended December 31, 2023, due to increases
in proactive maintenance activities, higher labor costs, and increased oil field service and supplies costs. Additionally, because of
the conveyance of the 10% ORRI in July 2023, the net production volumes decreased, which increases the "per BOE" amounts.
92
Production Taxes, Transportation and Processing
We pay production taxes, transportation
and processing costs based on realized oil and natural gas sales. Production taxes, transportation and processing costs were $2,343,862
on a combined Successor and Predecessor basis for the year ended December 31, 2023, compared to $3,484,477 for the year ended December
31, 2022. As a percentage of oil and natural gas sales, these costs were 9% in both periods. Production taxes, transportation, and processing
as a percent of total oil and natural gas sales are consistent with historical trends.
Depletion, Depreciation and Amortization
Depletion, depreciation and
amortization ("DD&A") was $1,849,876 on a combined Successor and Predecessor basis for the year ended December 31, 2023,
compared to $1,613,402 for the year ended December 31, 2022. DD&A was $4.53 per BOE on a combined Successor and Predecessor basis
for the year ended December 31, 2023, compared to $3.41 per BOE for the year ended December 31, 2022. The aggregate increase in DD&A
expense for the year ended December 31, 2023 compared to 2022 was driven by a 33% increase in the DD&A rate per BOE, partially offset
by a 21% decrease in production levels. The increase in the DD&A rate per BOE was driven by the increase in the oil and gas properties
balance due to the development of the Seven Rivers waterflood interval and the decrease in the reserves balance due to the conveyance
of the 10% overriding royalty interest to Pogo Royalty.
Accretion of Asset Retirement Obligations
Accretion expense was $859,102
on a combined Successor and Predecessor basis for the year ended December 31, 2023, compared to $1,575,296 for the year ended December
31, 2022. Accretion expense was $2.32 per BOE for the on a combined Successor and Predecessor basis for the year ended December 31, 2023,
compared to $3.33 per BOE for the year ended December 31, 2022. The aggregate decrease in accretion expense for the fiscal year ended
December 31, 2023 compared to 2022 was driven by changes in certain assumptions, specifically the inflation factor and discount rate as
a result of the acquisition date where we revised our estimates as part of its fair value estimates for the acquired business.
General and Administrative
General and administrative
expenses were $7,253,384 on a combined Successor and Predecessor basis for the year ended December 31, 2023, compared to $2,953,202 for
the year ended December 31, 2022. The increase for general and administrative expenses is primarily due to increased cost of outsourced
legal, professional, and accounting services as a result of the transaction disclosed in Note 1 in the notes to the consolidated
financial statements and the costs of being a public company. The general and administrative expense total of $3,553,117 for the period
from November 15, 2023 to December 31, 2023 for the Successor includes $1,500,000 from the 138,122 shares of Class A common stock issued
to White Lion for the commitment fee on the Common Stock Purchase Agreement, $910,565 in stock-based compensation to certain Founders
under the Founder Pledge Agreement, and $135,400 in other stock-based compensation.
Acquisition costs
Acquisition costs were $9,999,860
during the Successor period from November 15, 2023 to December 31, 2023, and included an aggregate of $7,854,660 in costs related to the
Forward Purchase Agreement and the Non-Redemption Agreements, due diligence and broker fees related to closing the Purchase.
Interest Expense and amortization of debt discount
Interest expense was $1,043,312
for the period from November 15, 2023 to December 31, 2023 (Successor), $1,834,208 for the period from January 1, 2023 to November 14,
2023 (Predecessor), compared to $1,076,060 for the year ended December 31, 2022. The Successor period interest expense is driven by the
Senior Secured Term loan entered into as part of the Closing, and the Private Notes Payable. The increase in the Predecessor period from
January 1, 2023 to November 15, 2023 compared to the year ended December 31, 2022 was primarily due to an increase in the average amount
of the Predecessor' revolving credit facility outstanding and an increase in the weighted average interest rate. The revolving credit
facility was not assumed in the Acquisition.
93
Amortization of debt discount
was $1,191,553 period from November 15, 2023 to December 31, 2023 (Successor), and attributable to deferred finance costs paid on the
Senior Secured Term Loan, and discounts associated with the Private Notes Payable during 2023.
Change in fair value of forward purchase agreement
The change in fair value of
forward purchase agreement consisted of a gain of $3,268,581 for the period from November 15, 2023 to December 31, 2023 for the Successor
related to the inputs used in the Company's fair value estimate of the FPA Put Option. The key inputs to the fair value estimate
include the Company's stock price, which declined during the Successor period, and the likelihood, timing and price of a potential
dilutive offering.
Change in fair value of warrant liabilities
The change in fair value of
warrant liabilities consisted of a gain of $187,704 for the period from November 15, 2023 to December 31, 2023 for the Successor related
to fluctuations in the trading price of the Company's warrants, a portion of which are accounted for as liabilities due to the redemption
provisions in those issued to Private Note holders.
Loss on asset sales
Loss on asset sales was $816,011
on a combined Successor and Predecessor basis for the year ended December 31, 2023, compared to $0 for the year ended December 31, 2022.
The increase was due to the loss that was recognized as a result of the conveyance of the 10% overriding royalty interest to Pogo Royalty
in July 2023.
Liquidity and Capital Resources
Liquidity
Our main sources of liquidity
have been internally generated cash flows from operations and credit facility borrowings. Our primary use of capital has been for the
development of oil and gas properties and the return of initial invested capital to our owners. We continually monitor potential capital
sources for opportunities to enhance liquidity or otherwise improve our financial position.
As of September 30, 2024,
we had outstanding debt of $24,735,391 under our Senior Secured Term Loan, $15,000,000 under the Seller Promissory Note, and $3,875,750
of outstanding private notes payable and $1,019,037 from merchant cash advances. A total of $15,048,293 of this is due within one year,
including a $5,000,000 estimated excess cash flow payment under the terms of the Senior Secured Term Loan. As of September 30, 2024,
we had $2,746,896 of cash and cash equivalents on hand, of which $2,600,000 is in an escrow account pursuant to the requirements of the
Senior Secured Term Loan, and had a working capital deficit of $38,801,444. These conditions raise substantial doubt about our ability
to continue as a going concern within one year after the date that the financial statements are issued.
The Company had positive cash flow from operations
of $3,346,362 for the nine months ended September 30, 2024 and $8,675,037 for the year ended December 31, 2023 on a pro forma basis of
the combined Successor and Predecessor periods. Additionally, 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. We have a three-year Common Stock Purchase Agreement with a maximum funding limit of $150,000,000 that
can fund our operations and production growth, and be used to reduce liabilities. Through the date of this filing, we have received $4,575,714
in cash proceeds related to the sale of 4,000,000 shares of common stock under this agreement and expect to continue to utilize it to
fund operational needs. We cannot assure you, however, that any additional capital will be available to us on favorable terms or at all.
Our capital expenditures could be curtailed if our cash flows decline from expected levels.
94
Cash Flows
Sources and uses of cash for the nine months ended
September 30, 2024 and 2023, are as follows:
Nine Months
Ended
September 30,
2024
Nine Months
Ended
September 30,
2023
Successor
Predecessor
Net cash provided by operating activities
$
3,346,362
$
8,311,832
Net cash (used in) provided by investing activities
(3,295,667
)
(5,058,869
)
Net cash (used in) provided by financing activities
(809,253
)
(2,000,000
)
Net change in cash and cash equivalents
$
(758,558
)
$
1,252,963
Sources and uses of cash for
the years ended December 31, 2023, and 2022, are as follows:
Successor
Predecessor
November 15,
2023 to
December 31,
2023
January 1,
2023 to
November 14,
2023
Year Ended
December 31,
2022
Net cash provided by operating activities
$
484,474
$
8,190,563
$
18,651,132
Net cash (used in) provided by investing activities
18,296,176
(6,960,555
)
(20,700,859
)
Net cash (used in) provided by financing activities
(17,866,128
)
(3,000,000
)
3,000,000
Net change in cash and cash equivalents
$
914,522
$
(1,883,607
)
$
950,273
Operating Activities
The decrease in net cash flow
provided by operating activities for the nine months ended September 30, 2024, as compared to 2023 is primarily due to decreased production
volumes, and higher general and administrative and acquisition costs associated with public filings.
The decrease in net cash flow
provided by operating activities on a combined Successor and Predecessor basis for the year ended December 31, 2023, as compared to 2022
is primarily due to decreased net income as a result of decreased prices and production volumes, and higher general and administrative
and acquisition costs associated with public filings and the closing of the Acquisition.
Investing Activities
Net cash used in investing
activities for the nine months ended September 30, 2024 was primarily related to $3,275,667 in development costs for our reserves. Cash
flows used in investing activities in the Predecessor period for the nine months ended September 30, 2023 consisted primarily of $4,867,872
of cash paid for oil and gas property costs.
Net cash provided by investing
activities in the Successor period was primarily due to Trust Account withdrawals associated with the Closing in November 2023 of $49,362,479,
partially offset by the cash paid to the Sellers of Pogo of $30,827,804 at the Closing, net of cash acquired. Cash flows used in investing
activities in the Predecessor period ending November 14, 2023 consisted of $6,769,557 of cash paid for oil and gas property costs, which
was a decrease from $16,891,856 in the year ended December 31, 2022, primarily due to significant expenditures in the previous year to
upgrade certain wells and meet compliance requirements.
Financing Activities
Net cash used by financing
activities during the Successor period were primarily related to repayments of the Senior Secured Term Loan of $2,945,312 and Private
Notes Payable of $43,750, partially offset by $1,184,272 in cash proceeds from sales of common stock under the Common Stock Purchase Agreement,
$967,500 in cash proceeds from merchant cash advances, and an additional $450,000 in cash proceeds from the Private Notes Payable issued
during the nine months ended September 30, 2024. Cash flows used in financing activities in the Predecessor period for the nine months
ended September 30, 2023 consisted primarily of $2,000,000 in long-term debt repayments.
Net cash used by financing
activities during the Successor period were primarily related to the redemptions of common stock of Public Shares at Closing of $44,737,839,
partially offset by the net proceeds from the Senior Secured Term Loan of $27,191,008.
95
Off Balance Sheet Arrangements
As of June 30, 2024, the Company
did not have any off-balance sheet arrangements, as defined in the rules and regulations of the Securities and Exchange Commission ("SEC").
Contractual Obligations
We have contractual commitments
under our Senior Secured Term Loan, the Seller Promissory Note and the Private Notes Payable which include periodic interest payments.
See Note 5 to our interim condensed consolidated unaudited financial statements. We have contractual commitments that may require us to
make payments upon future settlement of our commodity derivative contracts. See Note 4 to our interim condensed consolidated unaudited
financial statements.
Our other liabilities represent
current and noncurrent other liabilities that are primarily comprised of environmental contingencies, asset retirement obligations and
other obligations for which neither the ultimate settlement amounts nor their timings can be precisely determined in advance.
Critical Accounting Estimates
The following is a discussion
of our most critical accounting estimates, judgements and uncertainties that are inherent in the Company's application of GAAP.
Successful Efforts Method of Accounting
We utilize the successful
efforts method of accounting for crude oil and gas producing activities as opposed to the alternate acceptable full cost method. In general,
we believe that net assets and net income are more conservatively measured under the successful efforts method of accounting for crude
oil and gas producing activities than under the full cost method, particularly during periods of active exploration. The critical difference
between the successful efforts method of accounting and the full cost method is that under the successful efforts method, exploratory
dry holes and geological and geophysical exploration costs are charged against earnings during the periods in which they occur; whereas,
under the full cost method of accounting, such costs and expenses are capitalized as assets, pooled with the costs of successful wells
and charged against the earnings of future periods as a component of depletion expense.
Proved Reserve Estimates
Estimates of our proved reserves
included in this report are prepared in accordance with GAAP and SEC guidelines. The accuracy of a proved reserve estimate is a function
of:
●
the quality and quantity of available data;
●
the interpretation of that data;
●
the accuracy of various mandated economic assumptions; and
●
the judgment of the persons preparing the estimate.
Our proved reserve information
included in this filing as of December 31, 2023 and 2022, was prepared by independent petroleum engineers. Because these estimates depend
on many assumptions, all of which may substantially differ from future actual results, proved reserve estimates will be different from
the quantities of oil and gas that are ultimately recovered. In addition, results of drilling, testing and production after the date of
an estimate may justify, positively or negatively, material revisions to the estimate of proved reserves.
It should not be assumed that
the standardized measure included as of December 31, 2023, is the current market value of our estimated proved reserves. In accordance
with SEC requirements, we based the 2023 standardized measure on a twelve-month average of commodity prices on the first day of each month
in 2023 and prevailing costs on the date of the estimate. Actual future prices and costs may be materially higher or lower than the prices
and costs utilized in the estimate. See Note 12 of notes to the consolidated financial statements for additional information.
Our estimates of proved reserves
materially impact depletion expense. If the estimates of proved reserves decline, the rate at which we records depletion expense will
increase, reducing future net income. Such a decline may result from lower commodity prices, which may make it uneconomical to drill for
and produce higher cost fields. In addition, a decline in proved reserve estimates may impact the outcome of our assessment of our proved
properties for impairment.
96
Impairment of Proved Oil and Gas Properties
We review our proved properties
to be held and used whenever management determines that events or circumstances indicate that the recorded carrying value of the properties
may not be recoverable. Management assesses whether or not an impairment provision is necessary based upon estimated future recoverable
proved reserves, commodity price outlooks, production and capital costs expected to be incurred to recover the reserves, discount rates
commensurate with the nature of the properties and net cash flows that may be generated by the properties. Proved oil and gas properties
are reviewed for impairment at the level at which depletion of proved properties is calculated. See Note 2 of notes to the consolidated
financial statements.
Asset Retirement Obligations
We have significant obligations
to remove tangible equipment and facilities and to restore the land at the end of crude oil and natural gas production operations. Our
removal and restoration obligations are primarily associated with plugging and abandoning wells. Estimating the future restoration and
removal costs is difficult and requires management to make estimates and judgments because most of the removal obligations are many years
in the future and contracts and regulations often have vague descriptions of what constitutes removal. Asset removal technologies and
costs are constantly changing, as are regulatory, political, environmental, safety and public relations considerations.
Inherent in the present value
calculation are numerous assumptions and judgments including the ultimate settlement amounts, credit-adjusted discount rates, timing of
settlement and changes in the legal, regulatory, environmental and political environments. To the extent future revisions to these assumptions
impact the present value of the existing asset retirement obligations, a corresponding adjustment is generally made to the crude oil and
natural gas property or other property and equipment balance. See Note 5 of notes to the consolidated financial statements.
Litigation and Environmental Contingencies
We make judgments and estimates
in recording liabilities for ongoing litigation and environmental remediation. Actual costs can vary from such estimates for a variety
of reasons. The costs to settle litigation can vary from estimates based on differing interpretations of laws and opinions and assessments
on the amount of damages. Similarly, environmental remediation liabilities are subject to change because of changes in laws and regulations,
developing information relating to the extent and nature of site contamination and improvements in technology. A liability is recorded
for these types of contingencies if we determine the loss to be both probable and reasonably estimable. See Note 9 of notes to the consolidated
financial statements.
Forward Purchase Agreement Valuation
The Company has determined
that the FPA Put Option, including the Maturity Consideration, within the Forward Purchase Agreement is (i) a freestanding financial instrument
and (ii) a liability (i.e., an in-substance written put option). This liability was recorded as a liability at fair value on the consolidated
balance sheet as of the reporting date in accordance with ASC 480. The fair value of the liability was estimated using a Monte-Carlo Simulation
in a risk-neutral framework. Specifically, the future stock price is simulated assuming a Geometric Brownian Motion ("GBM").
For each simulated path, the forward purchase value is calculated based on the contractual terms and then discounted back to present.
Finally, the value of the forward is calculated as the average present value over all simulated paths. The model also considered the likelihood
of a dilutive offering of common stock.
Derivative Instruments
The Company uses derivative
financial instruments to mitigate its exposure to commodity price risk associated with oil prices. The Company's derivative financial
instruments are recorded on the consolidated balance sheets as either an asset or a liability measured at fair value. The Company has
elected not to apply hedge accounting for its existing derivative financial instruments, and as a result, the Company recognizes the change
in derivative fair value between reporting periods currently in its consolidated statements of operations. The fair value of the Company's
derivative financial instruments is determined using industry-standard models that consider various inputs including: (i) quoted
forward prices for commodities, (ii) time value of money and (iii) current market and contractual prices for the underlying
instruments, as well as other relevant economic measures. Realized gains and losses from the settlement of derivative financial instruments
and unrealized gains and unrealized losses from valuation changes in the remaining unsettled derivative financial instruments are reported
in a single line item as a component of revenues in the consolidated statements of operations. Cash flows from derivative contract settlements
are reflected in operating activities in the accompanying consolidated statements of cash flows. See Note 4 for additional information
about the Company's derivative instruments.
New Accounting Pronouncements
The effects of new accounting
pronouncements are discussed in Note 2 to the consolidated financial statements.
97
MANAGEMENT
Our Board of Directors consists
of five directors. Three of the five directors are independent.
Name
Age
Title
Dante Caravaggio
67
Chief Executive Officer, President and Director
Mitchell B. Trotter
65
Chief Financial Officer and Director
David M. Smith
69
General Counsel and Secretary
Joseph V. Salvucci Sr
68
Director and Chairman
Joseph V. Salvucci Jr.
39
Director
Byron Blount
67
Director
Dante Caravaggio — Chief
Executive Officer, President and Director.
Mr. Caravaggio joined the company and has served as our Chief Executive Officer, President,
and Director since December 2023. Since April 2021, Mr. Caravaggio has served as Chairman of SWI Excavating, one of the leading regional
underground utility contractors in Colorado. In addition, since January 2021, Mr. Caravaggio has served as a strategy consultant for Shuler
Industries to advance proprietary renewable technologies. From January 2020 to April 2022, Mr. Caravaggio served on the board of directors
of McCarl's Inc., a leading energy constructor in the northeast United States. Prior to joining McCarl's Inc., Mr. Caravaggio
was Senior Vice President, Hydrocarbons Americas for KBR (US) since January 2018. Prior to his role with KBR (US), Mr. Caravaggio held
a number of roles as an executive and project manager with Parsons Corp. and Jacobs Engineering, overseeing upstream and downstream hydrocarbon
projects. Mr. Caravaggio received his MBA at Pepperdine University in Malibu, California and his BS and MS in Petroleum Engineering at
the University of Southern California.
Mr. Caravaggio is qualified
to serve as CEO and as a member of our board of directors based on our review of his qualifications, attributes, and skills, including
his oil and gas management experience and oil and gas acquisition experience.
Mitchell B. Trotter — Chief
Financial Officer and Director.
Mr. Trotter joined the company and has served as our Senior Vice President of Finance since October 2022
and became Chief Financial Officer and Director in November 2023. Mr. Trotter has 41 years of experience beginning his career
in 1981 as an auditor with Coopers & Lybrand for seven years. He then served as CFO of two private investor backed private
companies where the first was in real estate development and the latter in the engineering and construction industry. For the next 30 years,
Mr. Trotter served in various CFO and Controller positions with three publicly traded companies in the engineering and construction
services industry which were: Earth Tech to 2002; Jacobs Engineering to 2017; and AECOM to 2022. In those roles Mr. Trotter managed
up to 400 plus staff across six continents supporting global operations with clients in multiple industries across private, semi-public
and public sectors. Mr. Trotter earned his BS Accounting from Virginia Tech in 1981 and his MBA from Virginia Commonwealth University
in 1994. He professional credentials are: Certified Public Accountant in Virginia; Certified Management Accountant; and Certified in Financial
Management.
98
Partners, LLC in 2012 to acquire
oil and gas leases for drilling in the Rocky Mountain region. At Mr. Orr's direction, XNP Resources began acquiring a strategic
leasehold position in the Sand Wash Basin in Colorado. XNP Resources was able to secure a major leasehold position in the heart of what
has become the highly competitive Niobrara Shale formation in western Colorado. Since 2014, Mr. Orr has been developing an unconventional
resource play in Alaska that contains over 600 billion cubic feet of gas in stacked coal reservoirs. More recently, Mr. Orr
assembled a team of oil and gas professionals in order to study certain oil provinces in Columbia. S.A. Mr. Orr also serves
as President and on the Board of Directors of Houston Natural Resources, Inc. Mr. Orr has a Bachelor of Science degree in Geology
from Texas A&I University, with a minor in Mathematics.
David M. Smith, Esq. —
Vice President, General Counsel and Secretary of the Company.
Mr. Smith has served as our General Counsel and Secretary
since November 2023.
Mr. Smith is a licensed attorney in Texas with over 40 years' experience in the legal field
of oil and gas exploration and production, manufacturing, purchase and sale agreements, exploration agreements, land and leaseholds, right
of ways, pipelines, surface use, joint operating agreements, joint interest agreements, participation agreements and operations as well
as transactional and litigation experience in oil and gas, real estate, bankruptcy and commercial industries. Mr. Smith purchased 142,500
shares of our Common Stock as a founder. Mr. Smith has represented a number of companies in significant oil and gas transactions, mergers
and acquisitions, intellectual property research and development and sales in the oil and gas drilling business sector. Mr. Smith began
his career by serving in a land and legal capacity as Vice President of Land and, subsequently, as President of a public Canadian company
until beginning his legal practice as a partner with several law firms and ultimately creating his own independent legal practice. Mr.
Smith holds a degree in Finance from Texas A&M University, a Doctor of Jurisprudence from South Texas College of Law and is licensed
before the Texas Supreme Court.
Joseph V. Salvucci,
Sr. — Independent Director and Chairman of the Board.
Joseph V. Salvucci, Sr. has served as a member of
our board of directors since December 2021. JVS Alpha Property, LLC, an entity which the majority is beneficially owned by Mr. Salvucci,
with the balance owned by his immediate family, purchased 940,000 shares of our Common Stock as a founder. Mr. Salvucci acquired
PEAK Technical Staffing USA ("PEAK"), peaktechnical.com in 1986 and has grown the business to be a premier provider of USA-based
contract engineers and technical specialists, on assignment worldwide through a comprehensive, customer focused, enterprise-wide Managed
Staffing Solution. During his 35-year tenure as owner of the company, PEAK has expanded from Pittsburgh to do business in all 50 States,
Canada, Europe, South America, India, and the Philippines. He served 10 years on the board of directors culminating as President
and Board Chairman of the National Technical Services Association, a trade association representing 300,000 contractors on assignment
in the technical staffing industry that later merged with the American Staffing Association. He is an active member of the Young Presidents
Organization (YPO GOLD), formerly known as the World Presidents Organization (WPO) and has served as a member of the WPO International
Board, as well as chairman of East Central US (ECUS) Region and Pittsburgh chapters as Chairman of the Board. As a 1976 Civil Engineering
graduate of the University of Pittsburgh, he was a member of the Triangle (Engineering) Fraternity and its Alumni Association. He earned
the Triangle Fraternity Distinguished Alumnus Citation in 2011 and currently serves on the Board of Directors. After earning the rank
of Eagle Scout in 1970, he has remained active with the Boy Scouts of America, having served as the founding Chairman of the Board of
the Pittsburgh Chapter of the National Eagle Scout Association, earning the NOESA (National Outstanding Eagle Scout Award) and the Silver
Beaver Award and is past VP of Development and a board member of the Laurel Highlands Council in Western Pennsylvania. He was awarded
the Manifesting the Kingdom of God Award by the Catholic Diocese of Pittsburgh in 2011. He was awarded the "Big Mac Award"
from the Ronald McDonald Charities. As well as earning his BS in Civil Engineering from the University of Pittsburgh in 1976 and attended
Harvard Business School's OPM 33, graduating in 2003.
Joseph V. Salvucci,
Jr
.
— Independent Director.
Joseph V. Salvucci, Jr. has served as a member of our board of directors since
December 2021. Mr. Salvucci began his career with PEAK Technical Staffing USA in November 2010 and is currently serving
as the Chief Executive Officer overseeing nine branches with several hundred employees, and managing strategic initiatives for the company,
including Staff Training, Career Pathing, and Organic Growth. Mr. Salvucci Jr received his Executive MBA from the University of Pittsburgh.
In addition to his responsibilities as President/COO of PEAK, Mr. Salvucci serves on the board of Temporary Services Insurance Limited,
a Workers' Compensation company serving staffing companies.
Byron Blount — Independent
Director.
Mr. Blount joined the board of directors and is the chair of the audit committee since November 2023. Mr. Blount has extensive
experience in finance, investments, and acquisitions. He was Managing Director for the Blackstone Real Estate Group from 2011 to 2021
where he: had Primary Asset Management responsibilities for several industries and portfolio companies; oversaw the onboarding of acquisitions
and establishment of Blackstone-affiliated portfolio companies; and had Primary Disposition responsibilities for several portfolios and
companies across several industries. Mr. Blount was the LXR/Blackstone Executive Vice President from 2005 to 2010. His primary responsibilities
involved: underwriting and acquisition of domestic and international property and mortgage loan portfolios; asset management; renovation
and reconstruction projects, debt, and business model restructuring; and dispute resolution. He was a Principal of Colony Capital from
1993 to 2004 and was responsible for sourcing and structuring new investments, consummating transactions valued in excess of $5 billion.
His Primary Acquisitions responsibilities included domestic and international acquisitions of real property, distressed mortgage debt,
and real estate-related assets and entities. From 1987 to 1992, Mr. Blount was Vice President of WSGP which was formed to capitalize on
the struggles of the US Savings and Loan industry and the FSLIC. He was responsible for structuring and managing/working out new investment
opportunities, generally acquired from failed financial institutions. He graduated from University of Southern California in 1982 with
a B.S. in Business Administration. Mr. Blount earned his MBA from University of Southern California's Marshall School of Business
in 1987 and is a member Beta Gamma Sigma (International Business Honor Society).
99
Family Relationships
There are no family relationships
between any of our officers and directors, except that Mr. Joseph V. Salvucci Sr. and Mr. Joseph V. Salvucci
Jr. are father and son, respectively.
Number and Terms of Office of Officers and
Directors
Our board of directors has
five directors. Our board of directors is divided into two classes with only one class of directors being elected in each year and each
class (except for those directors appointed prior to our first annual meeting of stockholders) serving a two-year term. The class I
directors consist of Dante Caravaggio and Joseph V. Salvucci, Jr., and their term will expire at our annual meeting of stockholders
to be held in 2026. The class II directors consist of Mitchell Trotter, Byron Blount, and Joseph V. Salvucci, Sr. and their
term will expire at the annual meeting of stockholders to be held in 2025.
Our officers are elected by
the board of directors and serve at the discretion of the board of directors, rather than for specific terms of office. Our board of directors
is authorized to appoint persons to the offices set forth in our bylaws as it deems appropriate. Our bylaws provide that our officers
may consist of a Chief Executive Officer, President, Chief Financial Officer, Vice Presidents, Secretary, Assistant Secretaries, Treasurer
and such other offices as may be determined by the board of directors.
Director Independence
The NYSE American listing
standards require that a majority of our board of directors be independent. An "independent director" is defined generally
as a person other than an officer or employee of the company or its subsidiaries or any other individual having a relationship which in
the opinion of the company's board of directors, would interfere with the director's exercise of independent judgment in carrying
out the responsibilities of a director. Of the current members of our board of directors, Messrs. Salvucci Sr., Salvucci Jr., and Byron
Blount are each considered an "independent director" under the NYSE American listing standards and applicable SEC rules. Our
independent directors will have regularly scheduled meetings at which only independent directors are present.
Committees of the Board of Directors
The standing committees of
our Board of Directors consist of an audit committee (the "Audit Committee"), a compensation committee (the "Compensation
Committee"), and a Nominating and Corporate Governance Committee (the "Nominating Committee"). The Audit Committee,
Compensation Committee, and the Nominating Committee report to the Board.
Audit Committee
The members of our Audit Committee
are Messrs. Blount and Salvucci Sr., and Mr. Blount serves as chairman of the Audit Committee. As a smaller reporting company under
the NYSE American listing standards, we are required to have at least two members on the Audit Committee. The rules of the NYSE American
and Rule 10A-3 of the Exchange Act require that the audit committee of a listed company be comprised solely of independent directors.
Each of Messrs. Salvucci Sr. and Blount qualifies as an independent director under applicable rules. Each member of the Audit Committee
is financially literate and our board of directors has determined that Mr. Blount qualifies as an "audit committee financial expert"
as defined in applicable SEC rules.
We have adopted an audit committee charter,
which details the principal functions of the audit committee, including:
●
the appointment, compensation, retention, replacement, and oversight of the work of the independent registered accounting firm and any other independent registered public accounting firm engaged by us;
100
●
pre-approving all audit and non-audit services to be provided by the independent registered accounting firm or any other registered public accounting firm engaged by us, and establishing pre-approval policies and procedures;
●
reviewing and discussing with the independent registered accounting firm all relationships the auditors have with us in order to evaluate their continued independence;
●
setting clear hiring policies for employees or former employees of the independent registered accounting firm;
●
setting clear policies for audit partner rotation in compliance with applicable laws and regulations;
●
obtaining and reviewing a report, at least annually, from the independent registered accounting firm describing (i) the independent registered accounting firm's internal quality-control procedures and (ii) any material issues raised by the most recent internal quality-control review, or peer review, of the audit firm, or by any inquiry or investigation by governmental or professional authorities, within, the preceding five years respecting one or more independent audits carried out by the firm and any steps taken to deal with such issues;
●
reviewing and approving any related party transaction required to be disclosed pursuant to Item 404 of Regulation S-K promulgated by the SEC prior to us entering into such transaction; and
●
reviewing with management, the independent registered accounting firm, and our legal advisors, as appropriate, any legal, regulatory or compliance matters, including any correspondence with regulators or government agencies and any employee complaints or published reports that raise material issues regarding our financial statements or accounting policies and any significant changes in accounting standards or rules promulgated by the Financial Accounting Standards Board, the SEC or other regulatory authorities.
Compensation Committee
The members of our Compensation
Committee are Messrs. Salvucci Sr., Salvucci, Jr., and Blount. Mr. Salvucci, Jr. serves as chairman of the Compensation Committee.
Under the NYSE American listing standards and applicable SEC rules, we are required to have at least two members on the Compensation Committee,
all of whom must be independent.
We have adopted a compensation
committee charter, which details the principal functions of the compensation committee, including:
●
reviewing and approving on an annual basis the corporate goals and objectives relevant to our Chief Executive Officer's compensation, evaluating our Chief Executive Officer's performance in light of such goals and objectives and determining and approving the remuneration (if any) of our Chief Executive Officer based on such evaluation;
●
reviewing and approving the compensation of all of our other executive officers;
●
reviewing our executive compensation policies and plans;
●
implementing and administering our incentive compensation equity-based remuneration plans;
●
assisting management in complying with our proxy statement and annual report disclosure requirements;
●
approving all special perquisites, special cash payments and other special compensation and benefit arrangements for our executive officers and employees;
●
producing a report on executive compensation to be included in our annual proxy statement; and
●
reviewing, evaluating and recommending changes, if appropriate, to the remuneration for directors.
101
The charter also provides
that the Compensation Committee may, in its sole discretion, retain or obtain the advice of a compensation consultant, legal counsel or
other adviser and will be directly responsible for the appointment, compensation and oversight of the work of any such adviser. However,
before engaging or receiving advice from a compensation consultant, external legal counsel or any other adviser, the compensation committee
will consider the independence of each such adviser, including the factors required by the NYSE American and the SEC.
Nominating and Corporate Governance Committee
The members of our Nominating
Committee are Messrs. Blount, Salvucci Sr. and Salvucci Jr. Mr. Salvucci Jr. serves as chair of Nominating Committee.
The primary purposes of our
Nominating Committee is to assist the board in:
●
identifying, screening and reviewing individuals qualified to serve as directors and recommending to the board of directors candidates for nomination for election at the annual meeting of stockholders or to fill vacancies on the board of directors;
●
developing, recommending to the board of directors and overseeing implementation of our corporate governance guidelines;
●
coordinating and overseeing the annual self-evaluation of the board of directors, its committees, individual directors and management in the governance of the company; and
●
reviewing on a regular basis our overall corporate governance and recommending improvements as and when necessary.
The Nominating Committee is
governed by a charter that complies with the rules of the NYSE American.
A copy of each of our Nominating
Committee Charter, Compensation Committee Charter, and Audit Committee Charter are accessible at
https://EON-R.com /
.
Director Nominations
Our Nominating Committee will
recommend to the board of directors candidates for nomination for election at the annual meeting of the stockholders. The board of directors
will also consider director candidates recommended for nomination by our stockholders during such times as they are seeking proposed nominees
to stand for election at the next annual meeting of stockholders (or, if applicable, a special meeting of stockholders).
We have not formally established
any specific, minimum qualifications that must be met or skills that are necessary for directors to possess. In general, in identifying
and evaluating nominees for director, the board of directors considers educational background, diversity of professional experience, knowledge
of our business, integrity, professional reputation, independence, wisdom, and the ability to represent the best interests of our stockholders.
Compensation Committee Interlocks and Insider
Participation
None of our future executive
officers currently serves, and in the past year has not served, as a member of the board of directors or compensation committee of any
entity that has one or more executive officers serving on our board of directors.
Code of Ethics
We have adopted a Code of
Ethics applicable to our directors, officers and employees. The Code of Ethics is available on our website accessible at
https://EON-R.com
/
. In addition, a copy of the Code of Ethics will be provided without charge upon request from us. We intend to disclose any amendments
to or waivers of certain provisions of our Code of Ethics in a Current Report on Form 8-K.
Executive Officers
Our executive officers are:
Name
Position
Age
Dante Caravaggio
Chief Executive Officer
67
Mitchell B. Trotter
Chief Financial Officer
65
David M. Smith
General Counsel and Secretary
69
Biographical information for these individuals is set forth
above.
102
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
Summary Compensation Table
The following table sets forth
information regarding compensation earned during the years ended December 31, 2024 and 2023 by our principal executive officers and our
other most highly compensated executive officers as of the end of December 31, 2024 ("NEOs").
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
Name and Principal Position
Year
Salary
Bonus
Stock
Awards
(1)
Option
Awards
(2)
Non-equity
Incentive
plan
compensation
Nonqualified
deferred
compensation
earnings
All other
compensation
Total
($)
($)
($)
($)
($)
($)
($)
($)
Dante Caravaggio
2024
104,000
-
96,000
104,523
-
-
20,100
324,623
Chief Executive Officer and President
2023
10,417
-
-
-
-
-
-
10,417
Mitchell B. Trotter
2024
104,000
-
96,000
69,682
-
-
4,448
274,130
Chief Financial Officer
2023
31,250
-
-
-
-
-
-
31,250
David M. Smith
2024
104,000
-
96,000
69,682
-
-
20,100
289,782
General Counsel and Secretary
2023
31,250
-
-
-
-
-
-
31,250
Donald W. Orr
(3)
2024
-
-
57,600
-
-
-
117,000
174,600
Former President
2023
-
-
-
-
-
-
89,500
(6)
89,500
Donald H. Goree
(4)
2024
-
-
360,000
-
-
-
100,000
(7)
460,000
Former Chief Executive Officer and Chairman
2023
-
-
-
-
-
-
83,000
(7)
83,000
Diego Rojas
(5)
2024
-
-
108,000
-
-
-
108,000
Former Chief Executive Officer
2023
-
-
-
-
-
-
12,000
(8)
12,000
(1)
The fair value of the stock awards to Messrs. Caravaggio, Trotter and Smith were based on the closing price of the Company's Class A Common Stock on March 4, 2024 in accordance with FASB ASC 718.
(2)
The fair value of the option awards to Messrs. Caravaggio, Trotter and Smith were estimated under FASB ASC 718 using a Black-Scholes Option Pricing Model and the following assumptions: (1) expected volatility of 85.3% based on a group of comparable peer companies; (2) an exercise price of $2.02; (3) a stock price of $2.02 based on the closing price of the Company's Class A Common Stock on the grant date of March 12, 2024; (4) an expected term of 4.5 years; (5) a risk-free rate of 4.26%; and (6) a dividend rate of 0%.
(3)
Mr. Orr resigned on November 15, 2023, in connection with the Closing of the Purchase.
(4)
Mr. Goree resigned on November 15, 2023, in connection with the Closing of the Purchase.
(5)
Mr. Rojas resigned on December 17, 2023 to pursue other opportunities.
(6)
Mr. Orr earned other compensation of $64,500 for consulting services and an engagement fee of $25,000.
(7)
Mr. Goree earned other compensation of $33,000 for consulting services and an engagement fee of $50,000.
(8)
Mr. Rojas was paid in other compensation of $12,000 for separation pay.
103
Narrative Disclosures Regarding Compensation;
Employment Agreements
None of our NEOs received
any cash compensation prior to the Closing of the Purchase on November 15, 2023, other than the $10,000 per month, including the deferred
payments, administrative fee for office space, utilities, secretarial and administrative services, and the reimbursement for out-of-pocket expenses
paid to Rhône Merchant Resources Inc., and $5,000 per month paid to Donald W. Orr, no compensation or fees of any kind was paid
to the Sponsor, or members of our management team or their respective affiliates, for services rendered prior to or in connection with
the consummation of our initial business combination.
Dante Caravaggio
Effective December 18, 2023,
we entered into an employment agreement (the "Caravaggio Employment Agreement") with Dante Caravaggio, pursuant to which he
serves as our Chief Executive Officer, President, and a member of our board of directors. The Caravaggio Employment Agreement is on our
standard form for executives, and provides that we pay to Mr. Caravaggio an annual base salary of $250,000. In addition, we agreed to
issue a one-time Equity Sign-On Incentive to Mr. Caravaggio under the 2023 HNR Acquisition Corp Omnibus Incentive Plan (the "2023
Plan"), which consists of restricted stock units ("RSUs"), equal to 200% of base salary divided by $10 (i.e. 50,000
RSUs), subject to time-based vesting as follows: 1/3 on the first anniversary of the date of grant, 1/3 on the second anniversary of the
date of grant, and 1/3 on the third anniversary of the date of grant, so long as Mr. Caravaggio continues to provide service through
such vesting date. The 50,000 RSU's were approved by the Board and issued in March of 2024. Mr. Caravaggio will be permitted to
participate in any broad-based retirement, health and welfare plans that will be offered to all of our employees.
Pursuant to the Caravaggio
Employment Agreement, if we terminate Mr. Caravaggio's employment without Cause (as defined in the Caravaggio Employment Agreement)
or Mr. Caravaggio terminates his employment for Good Reason (as defined in the Caravaggio Employment Agreement), then Mr. Caravaggio will
be entitled to: (i) any accrued obligations as of the date of termination, including base salary, PTO and holidays, and continued benefits
required by our employee benefit plans; (ii) continued base salary for 12 months following the date of termination, paid in accordance
with our payroll practices; (iii) the total monthly cost of coverage for Mr. Caravaggio and his covered dependents under COBRA, if elected;
and (iv) full vesting in all equity grants as of the date of termination. To receive such severance benefits, Mr. Caravaggio will be required
to execute a non-competition agreement, non-solicitation agreement, or confidentiality agreement or invention assignment agreement and
release of claims.
Mitchell B. Trotter
Effective November 15, 2023,
we entered into an employment agreement (the "Trotter Employment Agreement") with Mitchell B. Trotter, pursuant to which he
serves as our Chief Financial Officer and a member of our board of directors. The Trotter Employment Agreement is on our standard form
for executives, and provides that we pay to Mr. Trotter an annual base salary of $250,000. In addition, we agreed to issue a one-time
Equity Sign-On Incentive to Mr. Trotter under the 2023 Plan, which consists of RSUs equal to 200% of base salary divided by $10 (i.e.
50,000 RSUs), subject to time-based vesting as follows: 1/3 on the first anniversary of the date of grant, 1/3 on the second anniversary
of the date of grant, and 1/3 on the third anniversary of the date of grant so long as Mr. Trotter continues to provide service through
such vesting date. The 50,000 RSU's were approved by the Board and issued in March of 2024. Mr. Trotter will be permitted to participate
in any broad-based retirement, health and welfare plans that will be offered to all of our employees.
Pursuant to the Trotter Employment
Agreement, if we terminate Mr. Trotter's employment without Cause (as defined in the Trotter Employment Agreement) or Mr. Trotter
terminates his employment for Good Reason (as defined in the Trotter Employment Agreement), then Mr. Trotter will be entitled to: (i)
any accrued obligations as of the date of termination, including base salary, PTO and holidays, and continued benefits required by our
employee benefit plans; (ii) continued base salary for 12 months following the date of termination, paid in accordance with our payroll
practices; (iii) the total monthly cost of coverage for Mr. Trotter and his covered dependents under COBRA, if elected; and (iv) full
vesting in all equity grants as of the date of termination. To receive such severance benefits, Mr. Trotter will be required to execute
a non-competition agreement, non-solicitation agreement, or confidentiality agreement or invention assignment agreement and release of
claims.
104
David M. Smith
Effective November 15, 2023,
we entered into an employment agreement (the "Smith Employment Agreement") with David M. Smith, pursuant to which he serves
as our General Counsel and Secretary. The Smith Employment Agreement is on our standard form for executives, and provides that we pay
to Mr. Smith an annual base salary of $250,000. In addition, we agreed to issue a one-time Equity Sign-On Incentive to Mr. Smith under
the 2023 Plan, which consists of RSUs equal to 200% of base salary divided by $10 (i.e. 50,000 RSUs), subject to time-based vesting as
follows: 1/3 on the first anniversary of the date of grant, 1/3 on the second anniversary of the date of grant, and 1/3 on the third anniversary
of the date of grant, so long as Mr. Smith continues to provide service through such vesting date. The 50,000 RSU's were approved
by the Board and issued in March of 2024. Mr. Smith will be permitted to participate in any broad-based retirement, health and welfare
plans that will be offered to all of our employees.
Pursuant to the Smith Employment
Agreement, if we terminate Mr. Smith's employment without Cause (as defined in the Smith Employment Agreement) or Mr. Smith terminates
his employment for Good Reason (as defined in the Smith Employment Agreement), then Mr. Smith will be entitled to: (i) any accrued obligations
as of the date of termination, including base salary, PTO and holidays, and continued benefits required by our employee benefit plans;
(ii) continued base salary for 12 months following the date of termination, paid in accordance with our payroll practices; (iii) the total
monthly cost of coverage for Mr. Smith and his covered dependents under COBRA, if elected; and (iv) full vesting in all equity grants
as of the date of termination. To receive such severance benefits, Mr. Smith will be required to execute a non-competition agreement,
non-solicitation agreement, or confidentiality agreement or invention assignment agreement and release of claims.
Donald W. Orr
In 2022, prior to the business
combination, we paid Donald W. Orr $52,500. In 2023, prior to the business combination, we again paid Donald Orr 52,500.
Effective November 15, 2023,
we entered into a Consulting Agreement with Donald W. Orr pursuant to which Mr. Orr will be compensated as follows as our designated Geology
and Acquisition consultant:
●
Initial cash incentive of $25,000, of which $4,500 had been paid as of December 31, 2023, with the balance being accrued; and
●
A cash consulting retainer fee of $8,000 per month for the first 12 months; and a cash consulting retainer fee of $12,000 per month for the next 24 months, of which $12,000 was paid as of December 31, 2023.
In addition, at the Closing
of the Purchase, we agreed to issue 30,000 RSUs to Mr. Orr, which vest as follows: 1/3 on the first anniversary of the date of grant,
1/3 on the second anniversary of the date of grant, and 1/3 on the third anniversary of the date of grant, so long as Mr. Orr continues
to provide service through such vesting date. The 30,000 RSU's were approved by the Board and issued in March of 2024. Vesting will
accelerate in full upon a termination of the Consulting Agreement by us without cause or by Mr. Orr for good reason.
Donald H. Goree
In 2023 and 2022, we paid
Rhône Merchant Resources Inc., an entity controlled by Mr. Goree, $55,000 and $105,000, respectively, for providing us with office
space, utilities, secretarial and administrative services. This arrangement was solely for our benefit and was not intended to provide
our officers or directors compensation in lieu of a salary.
Effective November 15, 2023,
we entered into a Consulting Agreement with Rhône Merchant House, Ltd., an entity of which Donald Goree is the owner and managing
director, pursuant to which Rhône Merchant House, Ltd. will be compensated as follows as our designated strategy consultant:
●
Initial cash incentive of $50,000, of which $30,000 had been paid as of December 31, 2023, with the balance being accrued; and
●
A monthly retainer of $22,000, of which $33,000 was paid as of December 31, 2023.
In addition, at the Closing
of the Purchase, we agreed to issue 60,000 RSUs to Rhône Merchant House, Ltd., which vest as follows: 1/3 on the first anniversary
of the date of grant, 1/3 on the second anniversary of the date of grant, and 1/3 on the third anniversary of the date of grant, so long
as Rhône Merchant House, Ltd. continues to provide service through such vesting date. The 60,000 RSU's were approved by the
Board of Directors and issued in March of 2024to Rhône Merchant House, Ltd. Vesting will accelerate in full upon a termination of
the Consulting Agreement by us without cause or by Rhône Merchant House, Ltd. for good reason.
Effective May 6, 2024, the
Company and Rhône Merchant House, Ltd. entered into a settlement and mutual release agreement pursuant to which the Company agreed
to pay $100,000 in cash, with $50,000 paid on or before execution and the remaining $50,000 by July 24, 2024 in the form of an unsecured
promissory note. The Company also issued 150,000 shares of Class A Common Stock subject to a contractual lockup as final consideration
under the Consulting Agreement, which was deemed terminated effective May 6, 2024.
105
Diego Rojas
Effective November 15, 2023,
we entered into an employment agreement (the "Rojas Employment Agreement") with Diego Rojas, pursuant to which he served as
our Chief Executive Officer and a member of our board of directors until December 17, 2023.
In connection with Mr. Rojas'
resignation, we entered into a Separation and Release Agreement with Mr. Rojas effective December 17, 2023. Pursuant to such Separation
and Release Agreement, we agreed to pay to Mr. Rojas: (i) his base salary through December 31, 2023; and (ii) $96,000, payable in equal
semi-monthly installments, beginning on January 1, 2024. In addition, we agreed to issue to Mr. Rojas 60,000 shares of our Class A Common
Stock.
Compensation Advisor
The Compensation Committee
retained Pearl Meyer & Partners, LLC ("Pearl Meyer"), a compensation consulting firm, to assist it in evaluating
the elements and levels of our executive compensation, including base salaries, annual cash incentive awards and equity-based incentives
for our executive officers, consultant, and directors. In November 2022, the Compensation Committee determined that Pearl Meyer is
independent from management and that Pearl Meyer's work has not raised any conflicts of interest. Pearl Meyer reports directly to
the Compensation Committee and the Compensation Committee has the sole authority to approve Pearl Meyer's compensation and may terminate
the relationship at any time.
Outstanding Equity Awards at Fiscal Year End
2024 Outstanding Equity Awards at Fiscal Year-end
Table
The following table sets forth
information regarding the outstanding equity awards held by our Named Executive Officers as of December 31, 2024:
Option
    Awards
Stock
    Awards
Name
Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)
Option
Exercise
Price
($)
Option
Expiration
Date
Number of
Shares or
Units of
Stock
That Have
Not Vested
(#)
Market
Value of
Shares or
Units of
Stock
That Have
Not Vested
($)
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights
That Have
Not Vested
(#)
Equity
Incentive
Plan
Awards:
Market
or Payout
Value of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested
($)
Dante Caravaggio
-
-
75,000
2.02
March 11, 2034
-
-
33,333
$
27,333
Mitchell
    B. Trotter
-
-
50,000
2.02
March 11, 2034
-
-
33,333
$
27,333
David
    M. Smith
-
-
50,000
2.02
March 11, 2034
-
-
33,333
$
27,333
Donald
    W. Orr
-
-
-
-
-
-
-
-
$
-
Donald
    H. Goree
-
-
-
-
-
-
-
-
$
-
Option Re-pricings
We have not engaged in any
option re-pricings or other modifications to any of our outstanding equity awards to our NEOs during fiscal years 2023 and 2024.
Payments Upon Termination or Change in Control
None of our NEOs are entitled
to receive payments or other benefits upon termination of employment or a change in control.
106
Retirement Plans
We do not maintain any deferred
compensation, retirement, pension or profit-sharing plans.
Employee Benefits
All of our full-time employees
are eligible to participate in health and welfare plans maintained by us, including:
●
medical, dental and vision benefits; and
●
basic life and accidental death & dismemberment insurance.
Our NEOs participate in these
plans on the same basis as other eligible employees. We do not maintain any supplemental health and welfare plans for our NEOs.
Nonqualified Deferred Compensation
Our NEOs did not earn any
nonqualified deferred compensation benefits from us during the years 2023 and 2024.
Omnibus Equity Incentive Plan
On November 15, 2023, we adopted
the 2023 Plan, the material terms of which are described below.
Purpose and Eligibility
.
The
purpose of the 2023 Plan is (i) to provide eligible persons with an incentive to contribute to our success and to operate and manage
our business in a manner that will provide for our long-term growth and profitability and that will benefit our stockholders and
other important stakeholders, including our employees and customers, and (ii) to provide a means of recruiting, rewarding, and retaining
key personnel.
Equity awards may be granted
under the 2023 Plan to officers, directors, including non-employee directors, other employees, advisors, consultants or other service
providers of the company or our subsidiaries or other affiliates, and to any other individuals who are approved by the Compensation Committee
as eligible to participate in the 2023 Plan. Only our employees or employees of our corporate subsidiaries are eligible to receive incentive
stock options.
Effective Date and Term
.
The 2023 Plan is effective as of November 15, 2023 and will terminate automatically at 11:59PM ET on the day before the 10
th
anniversary of the such date, unless earlier terminated by our board of directors or in accordance with the terms of the 2023 Plan.
Administration, Amendment
and Termination
.
The 2023 Plan will generally be administered by the Compensation Committee. Except where the authority to act
on such matters is specifically reserved to the full board of directors under the 2023 Plan or applicable law, the Compensation Committee
will have full power and authority to interpret and construe all provisions of the 2023 Plan, any award, and any award agreement, and
take all actions and to make all determinations required or provided for under the 2023 Plan, any award, and any award agreement, including
the authority to:
●
designate grantees of awards;
●
determine the type or types of awards to be made to a grantee;
●
determine the number of shares of Class A Common Stock subject to an award or to which an award relates;
●
establish the terms and conditions of each award;
●
prescribe the form of each award agreement;
●
subject to limitations in the 2023 Plan (including the prohibition on repricing of options or share appreciation rights without stockholder approval), amend, modify, or supplement the terms of any outstanding award; and
●
make substitute awards.
Our board of directors is
also authorized to appoint one or more committees of the board of directors consisting of one or more directors who need not meet the
independence requirements under the listing rules of any stock exchange on which Class A Common Stock is listed for certain limited purposes
permitted by the 2023 Plan, and to the extent permitted by applicable law, the Compensation Committee is authorized to delegate authority
to the Chief Executive Officer and/or any other officers of the company for certain limited purposes permitted by the 2023 Plan. Our board
of directors will retain the authority under the 2023 Plan to exercise any or all of the powers and authorities related to the administration
and implementation of the 2023 Plan.
107
Our board of directors may
amend, suspend, or terminate the 2023 Plan at any time; provided that with respect to awards that are granted under the 2023 Plan, no
amendment, suspension or termination may materially impair the rights of the award holder without such holder's consent. No such
action may amend the 2023 Plan without the approval of stockholders if the amendment is required to be submitted for stockholder approval
by our board of directors, the terms of the 2023 Plan, or applicable law.
Awards
.
Awards
under the 2023 Plan may be made in the form of:
●
stock options, which may be either incentive stock options or nonqualified stock options;
●
stock appreciation rights or "SARs";
●
restricted stock;
●
restricted stock units;
●
dividend equivalent rights;
●
performance awards, including performance shares;
●
other equity-based awards; or
●
cash.
An incentive stock option
is an option that meets the requirements of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"),
and a nonqualified stock option is an option that does not meet those requirements. A SAR is a right to receive upon exercise, in the
form of stock, cash or a combination of stock and cash, the excess of the fair market value of one share on the exercise date over the
exercise price of the SAR. Restricted stock is an award of common stock subject to restrictions over restricted periods that subject
the shares to a substantial risk of forfeiture, as defined in Section 83 of the Code. A restricted stock unit or deferred stock unit
is an award that represents a conditional right to receive shares in the future and that may be made subject to the same types of restrictions
and risk of forfeiture as restricted stock. Dividend equivalent rights are awards entitling the grantee to receive cash, shares, other
awards under the 2023 Plan or other property equal in value to dividends or other periodic payments paid or made with respect to a specified
number of shares of stock. Performance awards are awards made subject to the achievement of one or more performance goals over a performance
period established by the Compensation Committee. Other equity-based awards are awards representing a right or other interest that
may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to stock, other than an
option, SAR, restricted stock, restricted stock unit, unrestricted stock, dividend equivalent right, or a performance award.
The 2023 Plan provides that
each award will be evidenced by an award agreement, which may specify terms and conditions of the award that differ from the terms and
conditions that would otherwise apply under the 2023 Plan in the absence of the different terms and conditions in the award agreement.
In the event of any inconsistency between the 2023 Plan and an award agreement, the provisions of the 2023 Plan will control.
Awards under the 2023 Plan
may be granted alone or in addition to, in tandem with, or in substitution or exchange for any other award under the 2023 Plan, other
awards under another compensatory plan of the company or any of our affiliates (or any business entity that has been a party to a transaction
with the company or any of our affiliates), or other rights to payment from the company or any of our affiliates. Awards granted in addition
to or in tandem with other awards may be granted either at the same time or at different times.
The Compensation Committee
may permit or require the deferral of any payment pursuant to any award into a deferred compensation arrangement, which may include provisions
for the payment or crediting of interest or dividend equivalent rights, in accordance with rules and procedures established by the Compensation
Committee. Awards under the 2023 Plan generally will be granted for no consideration other than past services by the grantee of the award
or, if provided for in the award agreement or in a separate agreement, the grantee's promise to perform future services to the company
or one of our subsidiaries or other affiliates.
108
Forfeiture; Recoupment
.
We may reserve the right in an award agreement to cause a forfeiture of the gain realized by a grantee with respect to an award on
account of actions taken by, or failed to be taken by, such grantee in violation or breach of, or in conflict with, any employment agreement,
non-competition agreement, agreement prohibiting solicitation of employees or clients of the company or any affiliate, confidentiality
obligations with respect to the company or any affiliate, or otherwise in competition with the company or any affiliate, to the extent
specified in such award agreement. If the grantee is an employee and is terminated for "Cause" (as defined in the 2023 Plan),
the Compensation Committee may annul the grantee's award as of the date of the grantee's termination.
In addition, any award granted
pursuant to the 2023 Plan will be subject to mandatory repayment by the grantee to the company to the extent (i) set forth in the
2023 Plan or in an award agreement, or (ii) the grantee is or becomes subject to our clawback policy, or any applicable laws which
impose mandatory recoupment.
Shares Subject to the 2023
Plan
.
Subject to adjustment as described below, the maximum number of shares of common stock reserved for issuance under the
2023 Plan is equal to 1,400,000 shares of Class A Common Stock. The maximum number of shares of Class A Common Stock available
for issuance pursuant to incentive stock options granted under the 2023 Plan will be the same as the total number of shares of Class A
Common Stock reserved for issuance under the 2023 Plan. Shares issued under the 2023 Plan may be authorized and unissued shares, or treasury
shares, or a combination of the foregoing.
Any shares covered by an award,
or portion of an award, granted under the 2023 Plan that are not purchased or forfeited or canceled, or expire or otherwise terminate
without the issuance of shares or are settled in cash in lieu of shares, will again be available for issuance under the 2023 Plan.
Shares subject to an award
granted under the 2023 Plan will be counted against the maximum number of shares reserved for issuance under the 2023 Plan as one share
for every one share subject to such an award. In addition, at least the target number of shares of stock issuable under a performance
award will be counted against the maximum number of shares reserved for issuance under the 2023 Plan as of the grant date, but such number
will be adjusted to equal the actual number of shares of stock issued upon settlement of the performance award to the extent different
from such number initially counted against the share reserve.
The number of shares available
for issuance under the 2023 Plan will not be increased by the number of shares of Class A Common Stock: (i) tendered or withheld
or subject to an award surrendered in connection with the purchase of shares upon exercise of an option; (ii) that were not issued
upon the net settlement or net exercise of a stock-settled SAR, (iii) deducted or delivered from payment of an award in connection
with our tax withholding obligations; or (iv) purchased by us with proceeds from option exercises.
Options
.
The
2023 Plan authorizes the Compensation Committee to grant incentive stock options (under Section 422 of the Code) and options that
do not qualify as incentive stock options. An option granted under the 2023 Plan will be exercisable only to the extent that it is vested.
Each option will become vested and exercisable at such times and under such conditions as the Compensation Committee may approve consistent
with the terms of the 2023 Plan. No option may be exercisable more than ten years after the option grant date, or five years
after the option grant date in the case of an incentive stock option granted to a "ten percent stockholder" (as defined in
the 2023 Plan); provided that, to the extent deemed necessary or appropriate by the Compensation Committee to reflect differences in local
law, tax policy, or custom with respect to any option granted to a grantee who is a foreign national or is a natural person who is employed
outside of the United States, such option may terminate, and all rights to purchase shares of stock thereunder may cease, upon the
expiration of a period longer than ten (10) years from the date of grant of such option as the Compensation Committee shall determine.
The Compensation Committee may include in the option agreement provisions specifying the period during which an option may be exercised
following termination of the grantee's service. The exercise price of each option will be determined by the Compensation Committee,
provided that the per share exercise price will be equal to or greater than 100% of the fair market value of a share of Class A Common
Stock on the grant date (other than as permitted for substitute awards). If we were to grant incentive stock options to any ten percent
stockholder, the per share exercise price will not be less than 110% of the fair market value of a share of Class A Common Stock on the
grant date.
109
Incentive stock options and
nonqualified stock options are generally non-transferable, except for transfers by will or the laws of descent and distribution. The Compensation
Committee may, in its discretion, determine that a nonqualified stock option may be transferred to family members by gift or other transfers
deemed not to be for value.
Share Appreciation Rights.
The 2023 Plan authorizes the Compensation Committee to grant SARs that provide the recipient with the right to receive, upon exercise
of the SAR, cash, Class A Common Stock, or a combination of the two. The amount that the recipient will receive upon exercise of the SAR
generally will equal the excess of the fair market value of shares of Class A Common Stock on the date of exercise over the fair market
value of shares of Class A Common Stock on the grant date. SARs will become exercisable in accordance with terms determined by the Compensation
Committee. SARs may be granted in tandem with an option grant or independently from an option grant. The term of a SAR cannot exceed ten
(10) years from the date of grant. The per share exercise price of a SAR will be no less than the fair market value of one share
of Class A Common Stock on the grant date of such SAR.
SARs will be nontransferable,
except for transfers by will or the laws of descent and distribution. The Compensation Committee may determine that all or part of a SAR
may be transferred to certain family members of the grantee by gift or other transfers deemed not to be for value.
Fair Market Value.
For
so long as the Class A Common Stock remains listed on NYSE American, the fair market value of the Class A Common Stock on an award's
grant date, or on any other date for which fair market value is required to be established under the 2023 Plan, will be the closing price
of the Class A Common Stock as reported on NYSE American on such date. If there is no such reported closing price on such date, the fair
market value of the Class A Common Stock will be the closing price of the Class A Common Stock as reported on such market on the next
preceding date on which any sale of Class A Common Stock will have been reported.
If the Class A Common Stock
ceases to be listed on NYSE American and is listed on another established national or regional stock exchange, or traded on another established
securities market, fair market value will similarly be determined by reference to the closing price of the Class A Common Stock on the
applicable date as reported on such other stock exchange or established securities market.
If the Class A Common Stock
ceases to be listed on NYSE American or another established national or regional stock exchange, or traded on another established securities
market, the Compensation Committee will determine the fair market value of the Class A Common Stock by the reasonable application of a
reasonable valuation method in a manner consistent with Section 409A of the Code.
No Repricing
.
Except
in connection with a corporate transaction involving the company (including, without limitation, any stock dividend, distribution (whether
in the form of cash, shares of stock, other securities or other property), stock split, extraordinary dividend, recapitalization, change
in control, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of shares of stock or other
securities or similar transaction), we may not, without obtaining stockholder approval, (a) amend the terms of outstanding options
or SARs to reduce the exercise price of such outstanding options or SARs, (b) cancel outstanding options or SARs in exchange for,
or in substitution of, options or SARs with an exercise price that is less than the exercise price of the original options or SARs, (c) cancel
outstanding options or SARs with an exercise price above the current price of Class A Common Stock in exchange for cash or other securities,
in each case, unless such action is (i) subject to and approved by our stockholders or (ii) would not be deemed to be a repricing
under the rules of any stock exchange or securities market on which the Class A Common Stock is listed or publicly traded.
Restricted Stock; Restricted
Stock Units.
The 2023 Plan authorizes the Compensation Committee to grant restricted stock and restricted stock units. Subject to
the provisions of the 2023 Plan, the Compensation Committee will determine the terms and conditions of each award of restricted stock
and restricted stock units, including the restricted period for all or a portion of the award, the restrictions applicable to the award,
and the purchase price, if any, for the shares of stock subject to the award. The restrictions, if any, may lapse over a specified period
of time or through the satisfaction of conditions, in installments or otherwise, as the Compensation Committee may determine. A grantee
of restricted stock will have all of the rights of a stockholder as to those shares, including, without limitation, the right to vote
the shares and receive dividends or distributions on the shares, except to the extent limited by the Compensation Committee. The Compensation
Committee may provide in an award agreement evidencing a grant of restricted stock that (a) cash dividend payments or distributions
paid on restricted stock will be reinvested in shares of stock, which may or may not be subject to the same vesting conditions and restrictions
as applicable to such shares of restricted stock or (b) any dividend payments or distributions declared or paid on shares of restricted
stock will only be made or paid upon satisfaction of the vesting conditions and restrictions applicable to such shares of restricted stock.
Dividend payments or distributions declared or paid on shares of restricted stock which vest or are earned based on upon the achievement
of performance goals will not vest unless such performance goals for such shares of restricted stock are achieved, and if such performance
goals are not achieved, the grantee of such shares of restricted stock will promptly forfeit and, to the extent already paid or distributed,
repay to us such dividend payments or distributions. Grantees of restricted stock units and deferred stock units will have no voting or
dividend rights or other rights associated with share ownership, although the Compensation Committee may award dividend equivalent rights
on such units.
110
During the restricted period,
if any, when restricted stock and restricted stock units are non-transferable or forfeitable, a grantee is prohibited from selling,
transferring, assigning, pledging, exchanging, hypothecating, or otherwise encumbering or disposing of the grantees' restricted
stock and restricted stock units.
Dividend Equivalent Rights.
The 2023 Plan authorizes the Compensation Committee to grant dividend equivalent rights. Dividend equivalent rights may be granted
independently or in connection with the grant of any equity-based award, except that no dividend equivalent right may be granted
in connection with, or related to an option or SAR. Dividend equivalent rights may be paid currently (with or without being subject
to forfeiture or a repayment obligation) or may be deemed to be reinvested in additional shares of stock or awards which may thereafter
accrue additional dividend equivalent rights (with or without being subject to forfeiture or a repayment obligation) and may be payable
in cash, common shares, or a combination of the two. Dividend equivalent rights granted as a component of another award may (a) provide
that such dividend equivalent right will be settled upon exercise, settlement, or payment of, or lapse of restriction on, such other award
and that such dividend equivalent will expire or be forfeited or annulled under the same conditions as such award or (b) contain
terms and conditions which are different from the terms and conditions of such other award, provided that dividend equivalent rights credited
pursuant to a dividend equivalent right granted as a component of another award which vests or is earned based on the achievement of performance
goals will not vest unless such performance goals for such underlying award are achieved, and if such performance goals are not achieved,
the grantee of such dividend equivalent right will promptly forfeit and, to the extent already paid or distributed, repay to us payments
or distributions made in connection with such dividend equivalent rights.
Performance Awards
.
The 2023 Plan authorizes the Compensation Committee to grant performance awards. The Compensation Committee will determine the applicable
performance period, the performance goals, and such other conditions that apply to the performance award. Any performance measures may
be used to measure the performance of the company and our subsidiaries and other affiliates as a whole or any business unit of the company,
our subsidiaries, and/or our affiliates or any combination thereof, as the Compensation Committee may deem appropriate, or any performance
measures as compared to the performance of a group of comparable companies, or published or special index that the Compensation Committee
deems appropriate. Performance goals may relate to our financial performance or the financial performance of our operating units, the
grantee's performance, or such other criteria determined by the Compensation Committee. If the performance goals are met, performance
awards will be paid in cash, shares of stock, other awards, or a combination thereof.
Other Equity-Based Awards.
The
2023 Plan authorizes the Compensation Committee to grant other types of stock-based awards under the 2023 Plan. The terms and conditions
that apply to other equity-based awards are determined by the Compensation Committee.
Forms of Payment.
The
exercise price for any option or the purchase price (if any) for restricted stock, and vested restricted stock units is generally payable
(i) in cash or in cash equivalents acceptable to the company, (ii) to the extent the award agreement provides, by the tender
(or attestation of ownership) of shares of Class A Common Stock having a fair market value on the date of tender (or attestation) equal
to the exercise price or purchase price, (iii) to the extent permitted by law and to the extent permitted by the award agreement,
through a broker-assisted cashless exercise, or (iv) to the extent the award agreement provides and/or unless otherwise specified
in an award agreement, any other form permissible by applicable law, including net exercise or net settlement and service rendered to
us or our affiliates.
111
Change in Capitalization.
The Compensation Committee may adjust the terms of outstanding awards
under the 2023 Plan to preserve the proportionate interests
of the holders in such awards on account of any recapitalization, reclassification, share split, reverse share split, spin-off, combination
of share, exchange of shares, share dividend or other distribution payable in capital shares, or other increase or decrease in such shares
effected without receipt of consideration by the company. The adjustments will include proportionate adjustments to (i) the number
and kind of shares subject to outstanding awards and (ii) the per share exercise price of outstanding options or SARs.
Transaction not Constituting
a Change in Control.
If the company is the surviving entity in any reorganization, merger, or consolidation with one or more other
entities which does not constitute a "change in control" (as defined in the 2023 Plan), any awards will be adjusted to pertain
to and apply to the securities to which a holder of the number of common shares subject to such award would have been entitled immediately
after such transaction, with a corresponding proportionate adjustment to the per share price of options and SARs so that the aggregate
price per share of each option or SAR thereafter is the same as the aggregate price per share of each option or SAR subject to the option
or SAR immediately prior to such transaction. Further, in the event of any such transaction, performance awards (and the related performance
measures if deemed appropriate by the Compensation Committee) will be adjusted to apply to the securities that a holder of the number
of Class A Common Stock subject to such performance awards would have been entitled to receive following such transaction.
Effect of a Change in Control
in which Awards are not Assumed.
Except as otherwise provided in the applicable award agreement, in another agreement with the grantee,
or as otherwise set forth in writing, upon the occurrence of a change in control in which outstanding awards are not being assumed or
continued, the following provisions will apply to such awards, to the extent not assumed or continued:
●
Immediately prior to the occurrence of such change in control, in each case with the exception of performance awards, all outstanding shares of restricted stock and all restricted stock units, and dividend equivalent rights will be deemed to have vested, and all shares of stock and/or cash subject to such awards will be delivered; and either or both of the following two actions will be taken:
●
At least 15 days prior to the scheduled consummation of such change in control, all options and SARs outstanding will become immediately exercisable and will remain exercisable for a period of 15 days. Any exercise of an option or SAR during this 15-day period will be conditioned on the consummation of the applicable change in control and will be effective only immediately before the consummation thereof, and upon consummation of such change in control, the 2023 Plan and all outstanding but unexercised options and SARs will terminate, with or without consideration as determined by the Compensation Committee in its sole discretion; and/or
●
The Compensation Committee may elect, in its sole discretion, to cancel any outstanding awards of options, SARs, restricted stock, restricted stock units, and/or dividend equivalent rights and pay or deliver, or cause to be paid or delivered, to the holder thereof an amount in cash or capital stock having a value (as determined by the Compensation Committee acting in good faith), in the case of restricted stock, restricted stock units, deferred stock units, and dividend equivalent rights (for shares of stock subject thereto), equal to the formula or fixed price per share paid to holders of shares of stock pursuant to such change in control and, in the case of options or SARs, equal to the product of the number of shares of stock such subject to such options or SARs multiplied by the amount, if any, which (i) the formula or fixed price per share paid to holders of shares of stock pursuant to such change in control exceeds (ii) the option price or SAR price applicable to such options or SARs.
●
For performance awards, if less than half of the performance period has lapsed, such awards will be treated as though the target performance thereunder has been achieved. If at least half of the performance period has lapsed, such performance awards will be earned, as of immediately prior to but contingent on the occurrence of such change in control, based on the greater of (i) deemed achievement of target performance or (ii) determination of actual performance as of a date reasonably proximate to the date of consummation of the change in control as determined by the Compensation Committee, in its sole discretion.
●
Other Equity-Based Awards will be governed by the terms of the applicable award agreement.
Effect of a Change in Control
in which Awards are Assumed.
Except as otherwise provided in the applicable award agreement, in another agreement with
the grantee, or as otherwise set forth in writing, upon the occurrence of a change in control in which outstanding awards are being assumed
or continued, the following provisions will apply to such awards, to the extent not assumed or continued: The 2023 Plan and the options,
SARs, restricted stock, restricted stock units, dividend equivalent rights, and other equity-based equity awards granted under the
2023 Plan will continue in the manner and under the terms so provided in the event of any change in control to the extent that provision
is made in writing in connection with such change in control for the assumption or continuation of such awards, or for the substitution
for such awards of new options, SARs, restricted stock, restricted stock units, dividend equivalent rights, and other equity-based awards
relating to the capital stock of a successor entity, or a parent or subsidiary thereof, with appropriate adjustment as to the number of
shares and exercise price of options and SARs.
112
In general, a "change
in control" means:
●
a transaction or series of related transactions whereby a person or group (other than the company or any of our affiliates) becomes the beneficial owner of 50% or more of the total voting power of our voting stock on a fully diluted basis;
●
individuals who constitute our board of directors, cease to constitute a majority of the members of our board of directors then in office;
●
a merger or consolidation of the company, other than any such transaction in which the holders of our voting stock immediately prior to the transaction own directly or indirectly at least a majority of the voting power of the surviving entity immediately after the transaction;
●
a sale of substantially all of our assets to another person or entity; or
●
the consummation of a plan or proposal for the dissolution or liquidation of the company.
Compensation of Directors
2024 Director Compensation Table
The following Director Compensation
Table sets forth information concerning compensation for services rendered by our independent directors for fiscal year 2024.
Name
Fees Earned or Paid
in Cash
($)
Stock
Awards
($)
Option
Awards
($)
All Other
Compensation
($)
Total
($)
Byron Blount
(1)
$
27,000
$
139,200
$
-
$
5,025
$
171,225
Joseph Salvucci, Jr.
(2)
27,000
143,040
-
-
170,040
Joseph Salvucci, Sr.
(3)
27,000
148,800
-
-
175,800
Total:
$
81,000
$
431,040
$
-
$
5,025
$
517,065
(1)
Mr. Blount was appointed to serve as a member of the Board
of Directors in November 2023.
(2)
Mr. Salvucci, Jr. was appointed to serve as a member
of the Board of Directors in December 2021.
(3)
Mr. Salvucci, Sr. was appointed to serve as a member
of the Board of Directors in December 2021.
Messrs. Caravaggio and Trotter
have not been included in the Director Compensation Table because there were NEOs of our company for all of our 2024 fiscal year, and
all compensation paid to each of them during our 2024 fiscal year is reflected in the Summary Compensation Table above.]
Director Compensation Program
We believe that attracting
and retaining qualified directors is critical to our ability to grow in a manner that is consistent with our corporate governance principles
and that is designed to create value for stockholders. We also believe that structuring director compensation with a significant equity
component is key to achieving our goals. We believe that this structure will also allow directors to carry out their responsibilities
with respect to oversight of the Company while also maintaining alignment with stockholder interests and fiduciary obligations. We anticipate
that embedding these core principles and values of alignment and solid governance will enhance our ability to grow and unlock value for
stockholders. We have implemented a director compensation policy for our non-employee directors, which is consists of:
●
An annual retainer for non-employee directors of $75,000;
●
An annual grant for non-employee directors of RSUs, calculated by dividing $75,000 by the then current-stock price, which will vest on the first anniversary of the grant;
●
An additional annual retainer payment of $50,000 to the Chairman; $25,000 to the Chair of the Audit Committee; $20,000 to the Chair of the Compensation Committee; and $15,000 to the Chair of the Nominating Committee.
113
BENEFICIAL OWNERSHIP OF SECURITIES
The following table sets forth
information known to us regarding the beneficial ownership of Class A Common Stock as of January 15, 2025 (the "Beneficial Ownership
Date") by:
●
each person who is the beneficial owner of more than 5% of the outstanding shares of Class A Common Stock;
●
each of the Company's named executive officers and directors; and
●
all of the Company's executive officers and directors as a group.
Beneficial ownership is determined
according to the rules of the SEC, which generally provide that a person has beneficial ownership of a security if he, she or it possesses
sole or shared voting or investment power over that security. Under those rules, beneficial ownership includes securities that the individual
or entity has the right to acquire, such as through the exercise of warrants or stock options or the vesting of restricted stock units,
within 60 days of the Beneficial Ownership Date. Shares subject to warrants or options that are currently exercisable or exercisable within
60 days of the Beneficial Ownership Date or subject to restricted stock units that vest within 60 days of the Beneficial Ownership Date
are considered outstanding and beneficially owned by the person holding such warrants, options or restricted stock units for the purpose
of computing the percentage ownership of that person but are not treated as outstanding for the purpose of computing the percentage ownership
of any other person. Shares issuable pursuant to the exchange of OpCo Class B Units listed in the table below are represented in shares
of Class A Common Stock.
Except as described in the
footnotes below and subject to applicable community property laws and similar laws, the Company believes that each person listed above
has sole voting and investment power with respect to such shares.
The beneficial ownership of
our securities is based on (i) 12,895,544 shares of Class A Common Stock issued and outstanding as of the Beneficial Ownership
Date, and (ii) 500,000 shares of Class B Common Stock issued and outstanding as of the Beneficial Ownership Date.
Name and Address of Beneficial Owners
(1)
Number of
Shares
% of
Total Voting
Power
Directors and officers:
Byron Blount
(2)
159,806
1.2
%
Dante Caravaggio
(3)
830,190
6.1
%
Joseph V. Salvucci, Sr.
(4)
1,327,595
9.9
%
Joseph V. Salvucci, Jr.
(5)
932,617
6.6
%
Mitchell B. Trotter
(6)
206,565
1.5
%
David M. Smith
(7)
192,948
1.4
%
All directors and officers after as a group (6 persons)
3,642,220
24.7
%
Five Percent Holders:
JVS Alpha Property, LLC
(8)
2,026,762
14.3
%
HNRAC Sponsors LLC
(9)
501,406
3.6
%
Pogo Royalty, LLC
(10)
1,571,897
11.7
%
Donald H. Gorée
(11)
1,170,001
8.3
%
Steve Wright
(12)
1,500,000
10.1
%
*
Less than one percent (1%)
(1)
Unless otherwise noted, the business address of each of the following entities or individuals is 3730 Kirby Drive, Suite 1200, Houston, Texas 77098.
114
(2)
Consists of (1) 73,139 shares of Class A Common Stock held by Mr. Blount, (2) 37,500 shares of Class A Common Stock underlying 50,000 warrants held by Mr. Blount and (3) 49,167 shares underlying vested RSUs.
(3)
Consists of (1) 1,400 shares of Class A Common Stock held by Mr. Caravaggio, (2) 460,040 shares of Class A Common Stock held by Dante Caravaggio, LLC, of which Mr. Caravaggio has voting and dispositive control over the shares held by such entity, (3) 89,000 shares of Class A Common Stock held by Alexandria VMA Capital, LLC, of which Mr. Caravaggio's son has voting and dispositive control over the shares held by such entity, (4) 141,750 shares of Class A Common Stock underlying 189,000 warrants held by Dante Caravaggio, LLC, (5) 100,000 shares of Class A Common Stock held by Donna Caravaggio, the wife of Mr. Caravaggio (6) 13,000 shares underlying vested RSUs, and (7) 25,000 shares underlying vested common stock options.
(4)
Consists of 1,276,762 shares of Class A Common Stock held by JVS Alpha Property, LLC, over which Mr. Salvucci, Sr. has voting and dispositive control and 50,833 shares underlying vested RSUs.
(5)
Consists of (1) 132,784 shares of Class A Common Stock held directly by Mr. Salvucci, Jr., (2) 750,000 shares of Class A Common Stock underlying 1,000,000 warrants held by JVS Alpha Property, LLC, over which Mr. Salvucci, Jr. has voting and dispositive control and (4) 49,833 shares underlying vested RSUs.
(6)
Consists of (1) 34,398 shares of Class A Common Stock held by Mr. Trotter, (2) 142,500 shares of Class A Common Stock underlying 190,000 warrants held by Mr. Trotter, (3) 13,000 shares underlying vested RSUs, and (4) 16,667 shares underlying stock options vesting on March 12, 2025.
(7)
Consists of (1) 152,500 shares of Class A Common Stock held directly by Mr. Smith, (2) 10,781 shares of Class A Common Stock underlying warrants held by Mr. Smith, (3) 13,000 shares underlying vested RSUs, and (4) 16,667 shares underlying stock options vesting on March 12, 2025.
(8)
JVS Alpha Property, LLC's Manager is Joseph V. Salvucci, Jr., who has voting and dispositive control over the shares held by such entity. The business address for this holder is 583 Epsilon Drive, Pittsburgh, PA 15238.
(9)
Don Orr, as Manager of HNRAC Sponsors LLC, has voting and dispositive control over the securities held by such entity, however he disclaims any beneficial ownership of such shares. Includes the assumption that 378,750 shares of Class A Common Stock underlying 490,625 warrants held by HNRAC Sponsors LLC have been issued.
(10)
Consists of (1) 1,800,000 shares of Class B Common Stock, and (2) 201,022 shares of Class A Common Stock. Fouad Bashour, Amir Yoffe, Michael Rawlings and Marshall Payne have voting and dispositive control over the securities held by such entity. Does not include any Class B Common Stock upon conversion of preferred units of HNRA Upstream LLC, due to conversion only occurring on November 15, 2025. The address of Messrs. Bashour, Yoffe, Rawlings and Payne is 3879 Maple Avenue, Suite 400, Dallas, Texas 75219 and the telephone number at that address is 214-871-6812.
(11)
Mr. Gorée has sole voting and dispositive control over the securities held by Rhone Merchant House Ltd, which indirectly holds 367,969 private placement shares and 367,969 warrants by virtue of its 75% ownership in HNRAC Sponsors LLC, which owns 505,000 private placement shares. Includes the assumption that 378,750 shares of Class A Common Stock underlying 490,625 warrants held by HNRAC Sponsors LLC have been issued. The business address of Rhone Merchant House Ltd. is 81 Rue de France, 5
TH
Floor, Nice, France 06000.
(12)
Consists of 1,500,000 shares of Class A Common Stock underlying 2,000,000 warrants held by Mr. Wright. The business address of Mr. Wright is 1121 Boyce Rd, Suite 400, Pittsburgh, PA 15241.
115
MARKET PRICES AND DIVIDENDS
Market Price of Our Class A Common Stock
Our Class A Common Stock and
Public Warrants are currently listed on the NYSE American under the symbol "EONR and "EONR WS", respectively.
On January 15, 2025, the closing
sale price of our Class A Common Stock was $1.09 per share.
As of January 15, 2025, there
were 43 holders of record of our Class A Common Stock and there were 1 holder of record of our Class B Common Stock. The number of record
holders was determined from the records of our transfer agent and does not include beneficial owners of our shares of Class A Common Stock
whose shares are held in the names of various security brokers, dealers and registered clearing agencies.
Dividend Philosophy
Our board of directors has
not adopted a formal dividend policy for a recurring fixed dividend payment to shareholders. We have not paid any cash dividends on our
Class A Common Stock to date. The payment of cash dividends in the future will be dependent upon our revenues and earnings, if any, capital
requirements and general financial condition subsequent to completion of a business combination. The payment of any cash dividends in
the future will be within the discretion of our board of directors at such time. In addition, our board of directors is not currently
contemplating and does not anticipate declaring any stock dividends in the foreseeable future. Further, if we incur any indebtedness,
our ability to declare dividends may be limited by restrictive covenants we may agree to in connection therewith.
116
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Other than compensation arrangements
for our named executive officers and directors, we describe below each transaction or series of similar transactions, since January 1,
2023, to which we were a party or will be a party, in which:
●
the amounts involved exceeded or will exceed $120,000; and
●
any of our directors, executive officers or holders of more than 5% of our capital stock, or any member of the immediate family of the foregoing persons, had or will have a direct or indirect material interest.
See "
Compensation
of Executive Officers and Directors
" for a description of certain arrangements with our executive officers and directors.
Related Party Loans and Costs
In addition, in order to finance
transaction costs in connection with an intended initial business combination, the Sponsor or an affiliate of the Sponsor, or certain
of our officers and directors loaned us funds ("Working Capital Loans").
During 2023, we received
an additional $5,305,000 in cash proceeds from existing investors of the company, officers and directors and entered into various note
and warrant purchase agreements.
In March 2024, we issued
100,000 warrants to our Vice President of Finance and Administration having terms substantially similar to the private placement
warrants in connection with the receipt of $100,000 in cash and the issuance of a promissory note.
In March 2024, we issued
100,000 warrants to our Chief Financial Officer having terms substantially similar to the private placement warrants in connection
with the receipt of $100,000 in cash and the issuance of a promissory note.
In April 2024, we issued
100,000 warrants to our Chief Financial Officer having terms substantially similar to the private placement warrants in connection
with the receipt of $100,000 in cash and the issuance of a promissory note.
In May 2024, we issued 100,000
warrants to a stockholder controlled by a director having terms substantially similar to the private placement warrants in connection
with the receipt of $100,000 in cash and the issuance of a promissory note.
Administrative Service Agreement
The Company agreed to pay
$10,000 a month for office space, utilities and secretarial support provided by Rhone Merchant Resources Inc. (formerly known as Houston
Natural Resources, Inc.), an affiliate of the Sponsor. The administrative services commenced on the date the securities were first listed
on NYSE American and terminated upon the Closing of the Purchase. The Company paid $30,000 under this agreement during the six months
ended June 30, 2023, and owes the Sponsor $35,000 as of June 30, 2023.
Founder Pledge Agreement
In connection with the Closing,
we entered into the Founder Pledge Agreement with the Founders whereby, in consideration of placing the Trust Shares into escrow and entering
into the Backstop Agreement, we agreed: (a) by January 15, 2024, to issue to the Founders an aggregate number of newly issued shares of
Class A Common Stock equal to 10% of the number of Trust Shares; (b) by January 15, 2024, to issue to the Founders a number of warrants
to purchase an aggregate number of shares of Class A Common Stock equal to 10% of the number of Trust Shares, which such warrants shall
be exercisable for five years from issuance at an exercise price of $11.50 per shares; (c) if the Backstop Agreement is not terminated
prior to the Lockup Expiration Date, to issue an aggregate number of newly issued shares of Class A Common Stock equal to (i) (A) the
number of Trust Shares,
divided by
(B) the simple average of the daily VWAP of the Class A Common Stock during the five (5) Trading
Days prior to the date of the termination of the Backstop Agreement, subject to a minimum of $6.50 per share,
multiplied by
(C)
a price between $10.00-$13.00 per share (as further described in the Founder Pledge Agreement),
minus
(ii) the number of Trust
Shares; and (d) following the purchase of OpCo Preferred Units by a Founder pursuant to the Put Right, to issue a number of newly issued
shares of Class A Common Stock equal to the number of Trust Shares sold by such Founder. Until the Founder Pledge Agreement is terminated,
the Founders are not permitted to engage in any transaction which is designed to sell short the Class A Common Stock or any of our
other publicly traded securities.
Pursuant to the Founder Pledge
Agreement, the Company issued (i) 94,000 shares of Class A Common Stock to JVS Alpha Property, LLC, an entity controlled by Joseph Salvucci,
Jr., a member of our Board of Directors, (ii) 2,500 shares of Class A Common Stock to Byron Blount, a member of our Board of Directors,
and (iii) 30,000 shares of Class A Common Stock to Dante Caravaggio, LLC, an entity controlled by Dante Caravaggio, our Chief Executive
Officer, President, and member of our Board of Directors.
117
Exchange Agreements
On November 13, 2023, we entered
into exchange agreements ("Exchange Agreements") with certain holders (the "Noteholders") of promissory notes
issued us for working capital purposes which accrued interest at a rate of 15% per annum (the "Notes"). Pursuant to the Exchange
Agreements, we agreed to exchange, in consideration of the surrender and termination of the Notes in an aggregate principal amount (including
interest accrued thereon) of $2,257,771, for 451,563 shares of Common Stock at a price per share equal to $5.00 per share. The Noteholders
include JVS Alpha Property, LLC, a company which is controlled by Joseph Salvucci, Jr., member of our Board of Directors, Dante Caravaggio,
LLC, a company which is controlled by Dante Caravaggio, our Chief Executive Officer, President, and member of our Board of Directors,
Byron Blount, a member of our Board of Directors, and Mitchell B. Trotter, our Chief Financial Officer and a member of our Board of Directors.
Other
On February 14, 2023, we entered
into a consulting agreement with Donald Orr, our former President, which became effective upon the closing of the MIPA for a term of three
years. Under the agreement, we will pay Mr. Orr an initial cash amount of $25,000, an initial award of 60,000 shares of common stock,
a monthly payment of $8,000 for the first year of the agreement and $12,000 per month for the remaining two years, and two grants, each
consisting of restricted stock units ("RSUs") calculated by dividing $150,000 by the stock price on the one year and two year
anniversary of the initial Business Combination. Each of the RSU awards will vest upon the one year and two year anniversary of the grants.
In the event of termination of Mr. Orr without cause, Mr. Orr will be entitled to 12 months of the monthly payment in effect at that time,
and the RSU awards issued to Mr. Orr shall fully vest. The shares of common stock were approved by the Board and issued in March of 2024.
In connection with a Referral
Fee and Consulting Agreement (the "Consulting Agreement") by and between us and Alexandria VMA Capital, LLC, an entity controlled
by Dante Caravaggio, our Chief Executive Officer, President, and member of our Board of Directors ("Consultant"), we issued
89,000 shares of Class A Common Stock to Consultant in connection with the closing of the Purchase as consideration for services rendered
with a value of $900,000. The Consultant also earned an additional $900,000 transaction fee, of which the Company owes $762,000 as of
December 31, 2023.
On February 15, 2023, we entered
into a consulting agreement with Rhône Merchant House, Ltd. ("RMH Ltd"), a company control by our former Chairman and
CEO Donald H. Goree, which became effective upon the closing of the MIPA for a term of three years. Under the agreement, the Company will
pay to RMH Ltd an initial cash amount of $50,000, an initial award of 60,000 shares of common stock, a monthly payment of $22,000,
and two grants, each consisting of RSUs calculated by dividing $250,000 by the stock price on the one year and two year anniversary of
the initial Business Combination. Each of the RSU awards will vest upon the one year and two year anniversary of the grants. In the event
of termination of RMH Ltd. without cause, RMH Ltd. will be entitled to $264,000, and the RSU awards issued to RMH Ltd. shall fully vest.
The shares of common stock were approved by the Board of Directors and issued in March of 2024. Effective May 6, 2024, the Company and
Rhône Merchant House, Ltd. entered into a settlement and mutual release agreement pursuant to which the Company agreed to pay $100,000
in cash, with $50,000 paid on or before execution and the remaining $50,000 by July 24, 2024 in the form of an unsecured promissory note.
The Company also agreed to issue 150,000 shares of Class A Common Stock subject to a contractual lockup as final consideration under the
Consulting Agreement, which was deemed terminated effective May 6, 2024.
In October 2024, we issued
27,963 shares of Class A Common Stock (the "Pledge Shares") issued to Dante Caravaggio, Mitch Trotter, David Smith, Byron
Blount, and Jesse Allen (our VP of Operations) in connection with their agreement to pledge equity in favor of First International Bank
& Trust ("FIBT").
In October 2024, we issued
50,000 shares of Class A Common Stock to Mark Williams in connection with the forgiveness of $50,000 of accounts payable due to him for
his services as a consultant prior to our initial business combination.
118
SELLING SECURITYHOLDERS
This prospectus relates to
the resale of an aggregate of 5,079,050 shares of our Class A Common Stock consisting of (i) up to 5,000,000 shares of Class A Common
Stock that we may sell to White Lion, from time to time at our sole discretion, pursuant to the Common Stock Purchase Agreement, (ii)
69,050 Exchange Shares, and (iii) 10,000 Service Shares
We issued, or will issue,
all of the shares that may be sold hereunder in connection with the following transactions:
●
See the section above entitled "
White Lion Committed Equity Financing
" for a description of the transactions with White Lion.
●
In October 2024, Star5 Holdings LLC provided well stimulation services to our company. In December 2024, we agreed with Star5 Holdings LLC to issue 24,000 Exchange Shares to certain designees of Star5 Holdings, LLC in exchange for outstanding accounts payable owed to Star5 Holdings, LLC. In January 2025, we issued the 24,000 Exchanges shares equally to Curtie Wilie, James Crenshaw, and Scott H. Chadbourne as designees of Star5 Holdings, LLC .
●
In November and December 2024, Integrated Energy Services, Inc. provided petrophysical evaluation services to our company. In January 2025, we agreed with Integrated Energy Services, Inc. to issue 45,050 Exchange Shares in exchange for outstanding accounts payable owed to Integrated Energy Services, Inc., and we issued to Robert Barba, as designee of Integrated Energy Services, Inc., such Exchange Shares.
●
On November 1, 2023, we entered into a Targeting and Research Services Agreement with Intro-act, Inc., pursuant to which we agreed to issue 10,000 Service Shares to Intro-act, Inc. In January 2025, we issued 10,000 shares of Class A Common Stock to Peter Wright, Intro-act, Inc.'s designee, as satisfaction of our obligations under the Targeting and Research Services Agreement.
The following table sets forth
information with respect to the maximum number of shares of Class A Common Stock beneficially owned by the Selling Securityholders named
below and as adjusted to give effect to the sale of the shares offered hereby. The shares beneficially owned have been determined in accordance
with rules promulgated by the Securities and Exchange Commission, and the information is not necessarily indicative of beneficial ownership
for any other purpose. The information in the table below is current as of January 15, 2025. All information contained in the table below
is based upon information provided to us by the Selling Securityholders and we have not independently verified this information. The Selling
Securityholders are not making any representation that any shares covered by the prospectus will be offered for sale. The Selling Securityholders
may from time to time offer and sell pursuant to this prospectus any or all of the Class A Common Stock being registered.
Other than in connection with
the transactions listed above, none of the Selling Securityholders has had any material relationship with us within the past three years,
except Integrated Energy Services, Inc. has provided us with other petrophysical evaluation services in the past, and will continue to
provide such services to our company
The shares of Class A Common
Stock being covered hereby may be sold or otherwise disposed of from time to time during the period the registration statement of which
this prospectus is a part remains effective, by or for the account of the Selling Securityholders. After the date of effectiveness of
the registration statement of which this prospectus forms a part, the Selling Stockholders may have sold or transferred, in transactions
covered by this prospectus, some or all of their common stock.
119
As explained below under
"Plan of Distribution," we have agreed with the selling shareholder to bear certain expenses (other than broker discounts
and commissions, if any) in connection with the registration statement, which includes this prospectus.
Shares of
Common
Stock
Beneficially
Owned
Prior to
Offering
(1)
Shares
Being
Offered
Shares of
Common
Stock
Beneficially
Owned
After
Offering
(2)
Percentage
of
Common
Stock
Beneficially
Owned
After
Offering
(1)
White Lion Capital, LLC
(3)
-
5,000,000
-
-
Curtie Willie
8,000
8,000
(4)
-
-
James Crenshaw
8,000
8,000
(5)
-
-
Scott H. Chadbourne
8,000
8,000
(6)
-
-
Peter Wright
10,000
10,000
(7)
-
-
Robert Barba
125,050
45,050
(8)
80,000
*
*
Indicates beneficial ownership of less than 1%.
(1)
This table is based upon information supplied by principal stockholders and in Schedules 13D and 13G filed with the Securities and Exchange Commission. Unless otherwise indicated in the footnotes to this table and subject to community property laws, where applicable, we believe the stockholder named in this table has sole voting and investment power with respect to the shares indicated as beneficially owned. The number and percentage of shares beneficially owned are based on an aggregate of  (i) 12,895,544 shares of Class A Common Stock issued and outstanding as of January 15, 2025, and (ii) 500,000 shares of Class B Common Stock issued and outstanding as of January 15, 2025, and are determined under rules promulgated by the Securities and Exchange Commission. This information is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares as to which the individual has sole or shared voting power or investment power and also any shares which the individual has the right to acquire within 60 days through the exercise of any stock option or other right.
(2)
Because the Selling Securityholders identified in this table may sell some, all or none of the shares owned by it that are registered under this registration statement, and because, to our knowledge, there are currently no agreements, arrangements or understandings with respect to the sale of any of the shares registered hereunder, no estimate can be given as to the number of shares available for resale hereby that will be held by the Selling Securityholders at the time of this registration statement. Therefore, unless otherwise noted, we have assumed for purposes of this table that the Selling Securityholders will sell all of the shares beneficially owned by it as of January 15, 2025.
(3)
Represents up to 5,000,000 ELOC Shares. In accordance with Rule 13d-3(d) under the Exchange Act, we have excluded from the number of shares beneficially owned by White Lion prior to the offering all of the shares that White Lion may be required to purchase under the Common Stock Purchase Agreement, because the issuance of such shares is solely at our discretion and is subject to conditions contained in the Common Stock Purchase Agreement, the satisfaction of which are entirely outside of White Lion's control, including the registration statement that includes this prospectus becoming and remaining effective. Furthermore, the purchase of Common Stock is subject to certain agreed upon maximum amount limitations set forth in the Common Stock Purchase Agreement. Additionally, the Common Stock Purchase Agreement prohibits us from issuing and selling any shares of our Class A Common Stock to White Lion to the extent such shares, when aggregated with all other shares of our Class A Common Stock then beneficially owned by White Lion, would cause White Lion's beneficial ownership of our Class A Common Stock to exceed the 4.99% Beneficial Ownership Cap in the Common Stock Purchase Agreement. The Beneficial Ownership Cap may not be amended or waived under the Common Stock Purchase Agreement. The business address of White Lion is 17631 Ventura Blvd., Suite 1008, Encino, CA 91316. White Lion's principal business is that of a private investor. Dmitriy Slobodskiy Jr., Yash Thukral, Sam Yaffa, and Nathan Yee are the managing principals of White Lion. Therefore, each of Slobodskiy Jr., Thukral, Yaffa, and Yee may be deemed to have sole voting control and investment discretion over securities beneficially owned directly by White Lion and, indirectly, by White Lion. We have been advised that White Lion is not a member of the Financial Industry Regulatory Authority, or FINRA, or an independent broker-dealer. The foregoing should not be construed in and of itself as an admission by Slobodskiy Jr., Thukral, Yaffa, and Yee as to beneficial ownership of the securities beneficially owned directly by White Lion and, indirectly, by White Lion.
(4)
Represents 8,000 Exchange Shares.
(5)
Represents 8,000 Exchange Shares.
(6)
Represents 8,000 Exchange Shares.
(7)
Represents 10,000 Service Shares.
(8)
Represents 45,050 Exchange Shares.
120
DESCRIPTION OF SECURITIES
Pursuant to the Second A&R
Charter, our authorized capital stock consists of 121,000,000 shares, consisting of (i) 100,000,000 shares of Class A Common Stock, (ii)
20,000,000 shares of Class B Common Stock, par value $0.0001 per share, and (iii) 1,000,000 shares of preferred stock, par value $0.0001
per share. The following description summarizes the material terms of our capital stock. Because it is only a summary, it may not contain
all the information that is important to you.
Units
Public Units
Pursuant to the Initial Public
Offering, we sold 7,500,000 units at a price of $10.00 per unit (the "Units"). Each Unit consisted of one (1) share
of our common stock, $0.0001 par value and one (1) warrant to purchase three quarters of one share of common stock. On April 4,
2022, the Units separated into common stock and warrants, and ceased trading.
Private Placement Units
The Sponsor, together with
such other members, if any, of our executive management, directors, advisors or third party investors as determined by the Sponsor in
its sole discretion, purchased, in the aggregate, 505,000 units ("Private Placement Units") at a price of $10.00 per
Private Placement Unit in a private placement which included a share of common stock and warrant to purchase three quarters of one share
of common stock at an exercise price of $11.50 per share, subject to certain adjustments ("Private Placement Warrants" and
together, the "Private Placement") that occurred immediately prior to the Initial Public Offering in such amounts as is required
to maintain the amount in the Trust Account at $10.30 per Unit sold. The Sponsor agreed that if the over-allotment option was exercised
by the underwriter in full or in part, the Sponsor and/or its designees shall purchase from us additional private placement units on a
pro rata basis in an amount that is necessary to maintain in the trust account $10.30. Since the over-allotment was exercised
in full, the Sponsor purchased 505,000 Private Placement Units. The purchase price of the Private Placement Units was added
to the proceeds from the Public Offering to be held in the Trust Account pending completion of the Company's initial business combination.
The Private Placement Units (including the warrants and common stock issuable upon exercise of the Private Placement Units) will
not be transferable, assignable, or salable until 30 days after the completion of the initial business combination and they will
be non-redeemable so long as they are held by the original holders or their permitted transferees. If the Private Placement Units are
held by someone other than the original holders or their permitted transferees, the Private Placement Units will be redeemable by
the Company and exercisable by such holders on the same basis as the Warrants included in the Units being sold in the Initial Public
Offering. Otherwise, the Private Placement Units have terms and provisions that are substantially identical to those of the Warrants
sold as part of the Units in the Initial Public Offering.
Common Stock
Class A Common Stock
Holders of record of Class
A Common Stock are entitled to one vote for each share held on all matters to be voted on by stockholders. Unless specified in the Second
A&R Charter or our bylaws, or as required by applicable provisions of the Delaware General Corporation Law ("DGCL") or
applicable stock exchange rules, the affirmative vote of a majority of our common stock (with Class A Common Stock and Class B Common
Stock voting together in one class) that are voted is required to approve any such matter voted on by our stockholders. Our board of directors
is divided into two classes, each of which will generally serve for a term of one year with only one class of directors being elected
in each year. There is no cumulative voting with respect to the election of directors, with the result that the holders of more than 50%
of the shares voted for the election of directors can elect all of the directors. The holders of Class A Common Stock are entitled to
receive ratable dividends when, as and if declared by the board of directors out of funds legally available therefor.
Under Section 211(b)
of the DGCL, we are required to hold an annual meeting of stockholders for the purposes of electing directors in accordance with the bylaws
unless such election is made by written consent in lieu of such a meeting. We did not hold an annual meeting of stockholders to elect
new directors prior to the consummation of the Purchase, and thus we may not be in compliance with Section 211(b) of the DGCL, which
requires an annual meeting.
In the event of a liquidation,
dissolution or winding up of the company, the holders of Class A Common Stock are entitled to share ratably in all assets remaining available
for distribution to them after payment of liabilities and after provision is made for each class of stock, if any, having preference over
the Class A Common Stock. Our stockholders have no preemptive or other subscription rights. There are no sinking fund provisions applicable
to the Class A Common Stock.
121
Class B Common Stock
Each share of Class B
Common Stock has no economic rights but entitles its holder to one vote on all matters to be voted on by stockholders generally. Holders
of shares of Class A Common Stock and shares of Class B Common Stock will vote together as a single class on all matters presented
to the stockholders for their vote or approval, except as otherwise required by applicable law or by the Second A&R Charter. We do
not intend to list any shares of Class B Common Stock on any exchange.
Preferred Stock
The Second A&R Charter
provides that shares of preferred stock may be issued from time to time in one or more series. The Board of Directors is authorized to
fix the voting rights, if any, designations, powers, preferences, the relative, participating, optional or other special rights and any
qualifications, limitations and restrictions thereof, applicable to the shares of each series. The Board of Directors is able to, without
stockholder approval, issue preferred stock with voting and other rights that could adversely affect the voting power and other rights
of the holders of the common stock and could have anti-takeover effects. The ability of the Board of Directors to issue preferred
stock without stockholder approval could have the effect of delaying, deferring or preventing a change of control of the company or the
removal of existing management. We have no preferred stock outstanding at the date hereof. Although we do not currently intend to issue
any shares of preferred stock, we cannot assure investors that it will not do so in the future.
Warrants
Public Warrants
There are currently 8,625,000
warrants outstanding held by public shareholders ("Public Warrants").
Each Public Warrant entitles
the registered holder to purchase three quarters of one share of Class A Common Stock at a price of $11.50 per share, subject to adjustment
as discussed below, at any time commencing 30 days after the completion of the Purchase. However, no Public Warrants will be exercisable
for cash unless we have an effective and current registration statement covering the shares of Class A Common Stock issuable upon exercise
of the Public Warrants and a current prospectus relating to such shares of Class A Common Stock. Notwithstanding the foregoing, if a registration
statement covering the shares of Class A Common Stock issuable upon exercise of the Public Warrants is not effective within a specified
period following the consummation of the Purchase, Public Warrant holders may, until such time as there is an effective registration statement
and during any period when the Company shall have failed to maintain an effective registration statement, exercise Public Warrants on
a cashless basis pursuant to the exemption provided by Section 3(a)(9) of the Securities Act, provided that such exemption is available.
If that exemption, or another exemption, is not available, holders will not be able to exercise their Public Warrants on a cashless basis.
In the event of such cashless exercise, each holder would pay the exercise price by surrendering the Public Warrants for that
number of shares of Class A Common Stock equal to the quotient obtained by dividing (x) the product of the number of shares of Class
A Common Stock underlying the Public Warrants, multiplied by the difference between the exercise price of the Public Warrants and the
"fair market value" (defined below) by (y) the fair market value. The "fair market value" for this purpose
will mean the average reported last sale price of the shares of Class A Common Stock for the 5 trading days ending on the trading day
prior to the date of exercise. The Public Warrants will expire on the fifth anniversary of the completion of the Purchase, at 5:00 p.m.,
New York City time, or earlier upon redemption or liquidation.
122
We may call the Public Warrant
for redemption, in whole and not in part, at a price of $0.01 per Public Warrant,
●
at any time after the Public Warrant become exercisable,
●
upon not less than 30 days' prior written notice of redemption to each warrant holder,
●
if, and only if, the reported last sale price of the shares of Class A Common Stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations), for any 20 trading days within a 30 trading day period commencing at any time after the Public Warrants become exercisable and ending on the third business day prior to the notice of redemption to warrant holders; and
●
if, and only if, there is a current registration statement in effect with respect to the shares of Class A Common Stock underlying such Public Warrants.
The right to exercise will
be forfeited unless the Public Warrants are exercised prior to the date specified in the notice of redemption. On and after the redemption
date, a record holder of a Public Warrants will have no further rights except to receive the redemption price for such holder's
Public Warrants upon surrender of such Public Warrant.
The redemption criteria for
our Public Warrants have been established at a price which is intended to provide Public Warrants holders a reasonable premium to the
initial exercise price and provide a sufficient differential between the then- prevailing share price and the Public Warrant exercise
price so that if the share price declines as a result of our redemption call, the redemption will not cause the share price to drop below
the exercise price of the Public Warrants.
If we call the Public Warrants
for redemption as described above, our management will have the option to require all holders that wish to exercise Public Warrants to
do so on a "cashless basis." In such event, each holder would pay the exercise price by surrendering the Public Warrants for
that number of shares of Class A Common Stock equal to the quotient obtained by dividing (x) the product of the number of shares of Class
A Common Stock underlying the Public Warrants, multiplied by the difference between the exercise price of the Public Warrants and the
"fair market value" (defined below) by (y) the fair market value. The "fair market value" for this purpose shall
mean the average reported last sale price of the shares of Class A Common Stock for the 5 trading days ending on the third trading day
prior to the date on which the notice of redemption is sent to the holders of Public Warrants.
Continental Stock Transfer
& Trust Company, acts as warrant agent for the Public Warrants pursuant to a warrant agreement between Continental Stock Transfer
& Trust and us. The warrant agreement provides that the terms of the Public Warrants may be amended without the consent of any holder
(i) to cure any ambiguity or correct any mistake, including to conform the provisions of the Public Warrant agreement to the description
of the terms of the Public Warrants and the warrant agreement set forth in this prospectus, or to cure, correct or supplement any defective
provision, or (ii) to add or change any other provisions with respect to matters or questions arising under the warrant agreement as the
parties to the warrant agreement may deem necessary or desirable and that the parties deem to not adversely affect the interests of the
registered holders of the Public Warrants. The warrant agreement requires the approval, by written consent or vote, of the holders of
at least 50% of the then outstanding Public Warrants in order to make any change that adversely affects the interests of the registered
holders.
The exercise price and number
of shares of Class A Common Stock issuable on exercise of the Public Warrants may be adjusted in certain circumstances including in the
event of a stock dividend, extraordinary dividend or our recapitalization, reorganization, merger or consolidation. However, except as
described below, the Public Warrants will not be adjusted for issuances of shares of Class A Common Stock at a price below their respective
exercise prices.
123
The Public Warrants may be
exercised upon surrender of the warrant certificate on or prior to the expiration date at the offices of the warrant agent, with the exercise
form on the reverse side of the warrant certificate completed and executed as indicated, accompanied by full payment of the exercise price,
by certified or official bank check payable to us, for the number of Public Warrants being exercised. The warrant holders do not have
the rights or privileges of holders of shares of Class A Common Stock and any voting rights until they exercise their Public Warrants
and receive shares of Class A Common Stock. After the issuance of shares of Class A Common Stock upon exercise of the Public Warrants,
each holder will be entitled to one vote for each share held of record on all matters to be voted on by stockholders.
Warrant holders may elect
to be subject to a restriction on the exercise of their Public Warrants such that an electing warrant holder would not be able to exercise
their Public Warrants to the extent that, after giving effect to such exercise, such holder would beneficially own in excess of 9.8% of
the shares of Class A Common Stock outstanding.
No fractional shares will
be issued upon exercise of the Public Warrants. If, upon exercise of the Public Warrants, a holder would be entitled to receive a fractional
interest in a share, we will, upon exercise, round up to the nearest whole number the number of shares of Class A Common Stock to be issued
to the warrant holder.
We have agreed that, subject
to applicable law, any action, proceeding or claim against us arising out of or relating in any way to the warrant agreement, including
under the Securities Act, will be brought and enforced in the courts of the State of New York or the United States District Court for
the Southern District of New York, and we irrevocably submit to such jurisdiction, which jurisdiction will be the exclusive forum for
any such action, proceeding or claim. This exclusive forum provision shall not apply to suits brought to enforce a duty or liability created
by the Exchange Act, any other claim for which the federal district courts of the United States of America are the sole and exclusive
forum.
Private Warrants
As of December 31, 2024, the following non-Public
Warrants were outstanding:
Number of warrants
Exercise price
Issuance Date
Expiry date
Remaining life
(in years)
56,000
$
11.50
January 23, 2023
January 19, 2028
3.30
541,000
$
11.50
January 27, 2023
January 26, 2028
3.32
700,000
$
11.50
February 14, 2023
February 13, 2028
3.37
67,000
$
11.50
April 13, 2023
April 11, 2028
3.53
50,000
$
11.50
April 24, 2023
April 22, 2028
3.56
50,000
$
11.50
May 4, 2023
May 2, 2028
3.59
15,000
$
11.50
May 5, 2023
May 3, 2028
3.59
100,000
$
11.50
May 18, 2023
May 16, 2028
3.58
250,000
$
11.50
May 24, 2023
May 22, 2028
3.64
150,000
$
11.50
June 6, 2023
June 4, 2028
3.68
200,000
$
11.50
July 11, 2023
July 9, 2028
3.78
25,000
$
11.50
July 13, 2023
July 11, 2028
3.78
50,000
$
11.50
July 20, 2023
July 18, 2028
3.80
10,000
$
11.50
July 24, 2023
July 22, 2028
3.81
250,000
$
11.50
August 23, 2023
August 21, 2018
3.89
50,000
$
11.50
August 29, 2023
August 27, 2028
3.91
20,000
$
11.50
September 8, 2023
September 6,2028
3.94
100,000
$
11.50
October 2, 2023
October 2, 2028
4.01
500,000
$
11.50
October 3, 2023
October 3, 2028
4.01
100,000
$
11.50
October 12, 2023
October 12, 2028
4.04
1,600,000
$
11.50
November 10, 2023
November 10, 2028
4.12
250,000
$
11.50
November 13, 2023
November 13, 2028
4.12
100,000
$
11.50
March 8, 2024
March 31, 2029
4.50
50,000
$
11.50
March 14, 2024
March 31, 2029
4.50
50,000
$
11.50
March 15, 2024
March 31, 2029
4.50
50,000
$
11.50
March 18, 2024
March 31, 2029
4.50
100,000
11.50
March 15, 2024
March 31, 2029
4.50
100,000
11.50
March 18, 2024
March 31, 2029
4.50
5,584,000
124
Dividends
We have not paid any cash
dividends on our Class A Common Stock to date. The payment of cash dividends in the future will be dependent upon our revenues and earnings,
if any, capital requirements and general financial condition subsequent to completion of a business combination. The payment of any cash
dividends in the future will be within the discretion of our board of directors at such time. In addition, our board of directors is not
currently contemplating and does not anticipate declaring any stock dividends in the foreseeable future. Further, if we incur any indebtedness,
our ability to declare dividends may be limited by restrictive covenants we may agree to in connection therewith.
Our Transfer Agent and Warrant Agent
The transfer agent for our
common stock and warrant agent for our warrants is Continental Stock Transfer & Trust Company. We have agreed to indemnify Continental
Stock Transfer & Trust Company in its roles as transfer agent and warrant agent, its agents and each of its stockholders, directors,
officers and employees against all liabilities, including judgments, costs and reasonable counsel fees that may arise out of acts performed
or omitted for its activities in that capacity, except for any liability due to any gross negligence, willful misconduct or bad faith
of the indemnified person or entity.
Listing of our Securities
Our Class A Common Stock and
Public Warrants are listed on the NYSE American under the symbols "EONR" and "EONR WS", respectively.
The Second A&R Charter
Certain Anti-Takeover Provisions of Delaware
Law and our Second Amended and Restated Certificate of Incorporation and Bylaws
We are subject to the provisions
of Section 203 of the DGCL regulating corporate takeovers. This statute prevents certain Delaware corporations, under certain circumstances,
from engaging in a "business combination" with:
●
a stockholder who owns 15% or more of our outstanding voting stock, otherwise known as an "interested stockholder";
●
an affiliate of an interested stockholder; or
●
an associate of an interested stockholder, for three years following the date that the stockholder became an interested stockholder.
A "business combination"
includes a merger or sale of more than 10% of our assets. However, the above provisions of Section 203 do not apply if:
●
our board of directors approves the transaction that made the stockholder an "interested stockholder," prior to the date of the transaction;
●
after the completion of the transaction that resulted in the stockholder becoming an interested stockholder, that stockholder owned at least 85% of our voting stock outstanding at the time the transaction commenced, other than statutorily excluded shares of common stock; or
●
on or subsequent to the date of the transaction, the business combination is approved by our board of directors and authorized at a meeting of our stockholders, and not by written consent, by an affirmative vote of at least two-thirds of the outstanding voting stock not owned by the interested stockholder.
The Second A&R Charter
provides that our board of directors will be classified into two classes of directors. As a result, in most circumstances, a person can
gain control of our board only by successfully engaging in a proxy contest at two or more annual meetings.
125
Our authorized but unissued
common stock and preferred stock are available for future issuances without stockholder approval and could be utilized for a variety of
corporate purposes, including future offerings to raise additional capital, acquisitions and employee benefit plans. The existence of
authorized but unissued and unreserved common stock and preferred stock could render more difficult or discourage an attempt to obtain
control of us by means of a proxy contest, tender offer, merger or otherwise.
Exclusive Forum for Certain Lawsuits
The Second A&R Charter
requires, to the fullest extent permitted by law, that derivative actions brought in our name, actions against our directors, officers,
other employees or stockholders for breach of fiduciary duty and certain other actions may be brought only in the Court of Chancery in
the State of Delaware and, if brought outside of Delaware, the stockholder bringing the suit will be deemed to have consented to service
of process on such stockholder's counsel except any action (A) as to which the Court of Chancery in the State of Delaware determines
that there is an indispensable party not subject to the jurisdiction of the Court of Chancery (and the indispensable party does not consent
to the personal jurisdiction of the Court of Chancery within ten days following such determination), (B) which is vested in the exclusive
jurisdiction of a court or forum other than the Court of Chancery or (C) for which the Court of Chancery does not have subject matter
jurisdiction. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock shall be deemed to have
notice of and consented to the forum provisions in the Second A&R Charter. This choice of forum provision may limit or make more costly
a stockholder's ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our directors,
officers, other employees or stockholders, which may discourage lawsuits with respect to such claims. Alternatively, if a court were to
find the choice of forum provision contained in the Second A&R Charter to be inapplicable or unenforceable in an action, we may incur
additional costs associated with resolving such action in other jurisdictions, which could harm our business, operating results and financial
condition.
The Second A&R Charter
provides that the exclusive forum provision will be applicable to the fullest extent permitted by applicable law, subject to certain exceptions.
Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created
by the Exchange Act or the rules and regulations thereunder. As a result, the exclusive forum provision will not apply to suits brought
to enforce any duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction.
In addition, our the Second A&R Charter provides that, unless we consent in writing to the selection of an alternative forum, the
federal district courts of the United States of America shall, to the fullest extent permitted by law, be the exclusive forum for
the resolution of any complaint asserting a cause of action arising under the Securities Act of 1933, as amended, or the rules and regulations
promulgated thereunder. We note, however, that there is uncertainty as to whether a court would enforce this provision and that investors
cannot waive compliance with the federal securities laws and the rules and regulations thereunder. Section 22 of the Securities Act
creates concurrent jurisdiction for state and federal courts over all suits brought to enforce any duty or liability created by the Securities
Act or the rules and regulations thereunder.
Special Meeting of Stockholders
Our bylaws provide that special
meetings of our stockholders may be called only by a majority vote of our board of directors, by our Chief Executive Officer or by our
Chairman.
Advance Notice Requirements for Stockholder
Proposals and Director Nominations
Our bylaws provide that stockholders
seeking to bring business before our annual meeting of stockholders, or to nominate candidates for election as directors at our annual
meeting of stockholders must provide timely notice of their intent in writing. To be timely, a stockholder's notice will need to
be received by the company secretary at our principal executive offices not later than the close of business on the 90
th
day
nor earlier than the opening of business on the 120
th
day prior to the anniversary of the immediately preceding annual
meeting of stockholders. Pursuant to Rule 14a-8 of the Exchange Act, proposals seeking inclusion in our annual proxy statement
must comply with the notice periods contained therein. Our bylaws also specify certain requirements as to the form and content of a stockholders'
meeting. These provisions may preclude our stockholders from bringing matters before our annual meeting of stockholders or from making
nominations for directors at our annual meeting of stockholders.
126
Action by Written Consent
Any action required or permitted
to be taken by our common stockholders must be effected by a duly called annual or special meeting of such stockholders and may not be
effected by written consent of the stockholders other than with respect to our common stock.
Classified Board of Directors
Our board of directors is
divided into two classes, Class I and Class II, with members of each class serving staggered one-year terms. The Second A&R Charter
provide that the authorized number of directors may be changed only by resolution of the board of directors. Subject to the terms of any
preferred stock, any or all of the directors may be removed from office at any time, but only for cause and only by the affirmative vote
of holders of a majority of the voting power of all then outstanding shares of our capital stock entitled to vote generally in the election
of directors, voting together as a single class. Any vacancy on our board of directors, including a vacancy resulting from an enlargement
of our board of directors, may be filled only by vote of a majority of our directors then in office.
Registration Rights
The holders of the founder
shares, the private placement shares and private placement warrants (and shares issuable upon exercise of such constituent securities)
and warrants that may be issued upon conversion of working capital loans, (and any shares of Class A Common Stock issuable upon exercise
of such warrants), are entitled to registration rights pursuant to one or more registration rights agreements to be signed prior to or
on the closing date of this offering requiring us to register such securities for resale. The holders of these securities will be entitled
to make up to three demands in the case of the founder shares, excluding short form demands, and one demand in the case of the private
placement shares and private placement warrants (and their constituent securities), the working capital loan warrants and, in each case,
the underlying shares, that we register such securities. In addition, the holders have certain "piggy-back" registration rights
with respect to registration statements filed subsequent to the completion of our initial business combination and rights to require us
to register for resale such securities pursuant to Rule 415 under the Securities Act.
The Company is obligated under
the Common Stock Purchase Agreement and the White Lion RRA to file a registration statement with SEC to register the Class A Common Stock
under the Securities Act of 1933, as amended, for the resale by White Lion of shares of Class A Common Stock that the Company
may issue to White Lion under the Common Stock Purchase Agreement.
We will bear the expenses
incurred in connection with the filing of any such registration statements.
127
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is discussion
of material U.S. federal income tax considerations of the purchase, ownership and disposition of common stock. This discussion applies
only to shares of common stock that are held as a capital asset for U.S. federal income tax purposes. Unless otherwise indicated or the
context otherwise requires, references in this subsection to "we," "us," "our" and other similar terms
refer to EON Resources Inc. This discussion is limited to U.S. federal income tax considerations, and does not address estate or gift
tax considerations or considerations arising under the tax laws of any state, local or non-U.S. jurisdiction. This discussion does not
describe all of the U.S. federal income tax consequences that may be relevant to you in light of your particular circumstances, including
the alternative minimum tax, the Medicare tax on certain investment income and the different consequences that may apply if you are subject
to special rules that apply to certain types of investors, such as:
●
financial institutions or financial services entities;
●
broker dealers;
●
insurance companies;
●
dealers or traders in securities subject to a mark-to-market method of accounting with respect to shares of common stock;
●
persons holding shares of common stock as part of a "straddle," hedge, integrated transaction or similar transaction;
●
U.S. holders (as defined below) whose functional currency is not the U.S. dollar;
●
"specified foreign corporations" (including "controlled foreign corporations"), "passive foreign investment companies" and corporations that accumulate earnings to avoid U.S. federal income tax;
●
U.S. expatriates or former long-term residents of the U.S.;
●
governments or agencies or instrumentalities thereof;
●
regulated investment companies (RICs) or real estate investment trusts (REITs);
●
persons who received their shares of common stock as compensation;
●
partnerships or other entities or arrangements treated as partnerships for U.S. federal income tax purposes; and
●
tax-exempt entities.
If you are a partnership or
entity or arrangement treated as a partnership for U.S. federal income tax purposes, the U.S. federal income tax treatment of your partners
(or other owners) will generally depend on the status of the partners and your activities. Partnerships and their partners (or other owners)
should consult their tax advisors with respect to the consequences to them of selling their shares of common stock.
This discussion is based on
the Code and administrative pronouncements, judicial decisions and final, temporary and proposed Treasury regulations as of the date hereof,
changes to any of which subsequent to the date of this prospectus may affect the tax consequences described herein. No assurance can be
given that the IRS would not assert, or that a court would not sustain, a contrary position.
128
The discussion below regarding
material U.S. federal income tax considerations of the purchase, ownership and disposition of common stock is intended to provide only
a summary of the material U.S. federal income tax consequences of the acquisition, ownership and disposition of common stock. It does
not address tax consequences that may vary with, or are contingent on, your individual circumstances. In addition, the discussion does
not address any non-income tax or any non-U.S., state or local tax consequences of ownership. Accordingly, you are strongly urged
to consult with your tax advisor to determine the particular United States federal, state, local or non-U.S. income or other tax consequences
to you
.
U.S. Holders
This section applies to you
if you are a "U.S. holder." A U.S. holder is a beneficial owner of shares of common stock who or that is, for U.S. federal
income tax purposes:
●
an individual who is a citizen or resident of the United States;
●
a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) organized in or under the laws of the United States, any state thereof or the District of Columbia;
●
an estate the income of which is subject to U.S. federal income taxation purposes regardless of its source; or
●
an entity treated as a trust for U.S. federal income tax purposes if (i) a court within the United States is able to exercise primary supervision over the administration of such trust, and one or more U.S. persons have the authority to control all substantial decisions of such trust or (ii) it has a valid election in effect under Treasury regulations to be treated as a U.S. person.
Taxation of Distributions
.
If we pay distributions in cash or other property (other than certain distributions of our stock or rights to acquire our stock) to U.S.
holders of common stock, such distribution generally will constitute a dividend for U.S. federal income tax purposes to the extent paid
from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Distributions in excess
of current and accumulated earnings and profits will constitute a return of capital that will be applied against and reduce (but not below
zero) the U.S. holder's adjusted tax basis in its shares of common stock. Any remaining excess will be treated as gain realized
on the sale or other disposition of the shares of common stock and will be treated as described below under the section titled "
Gain
or Loss on Sale, Taxable Exchange or Other Taxable Disposition of Shares of Common Stock
."
Dividends we pay to a U.S.
holder that is a taxable corporation generally will qualify for the dividends received deduction if the requisite holding period is satisfied.
With certain exceptions (including, but not limited to, dividends treated as investment income for purposes of investment interest deduction
limitations), and provided certain holding period requirements are met, dividends we pay to a non-corporate U.S. holder generally
will constitute "qualified dividends" that will be subject to tax at the maximum tax rate accorded to long-term capital
gains.
Gain or Loss on Sale, Taxable
Exchange or Other Taxable Disposition of Shares of Common Stock
. Upon a sale or other taxable disposition of shares of common stock,
a U.S. holder generally will recognize capital gain or loss in an amount equal to the difference between the amount of cash and the fair
market value of other consideration received and the U.S. holder's adjusted tax basis in the shares of common stock sold. A U.S.
holder's adjusted tax basis in its shares of common stock generally will equal the U.S. holder's acquisition cost less any
prior distributions paid to such U.S. holder with respect to its shares of common stock treated as a return of capital. Any such capital
gain or loss generally will be long-term capital gain or loss if the U.S. holder's holding period for the shares of common
stock so disposed of exceeds one year. Long-term capital gains recognized by noncorporate U.S. holders will be eligible to be taxed
at reduced rates. The deductibility of capital losses is subject to limitations. U.S. holders who hold different blocks of shares of common
stock (shares of common stock purchased or acquired on different dates or at different prices) should consult their tax advisors to determine
how the above rules apply to them.
Non-U.S. Holders
This section applies to you
if you are a "Non-U.S. holder." A Non-U.S. holder is a beneficial owner of shares of common stock who, or that is, for U.S.
federal income tax purposes:
●
a non-resident alien individual, other than certain former citizens and residents of the United States subject to U.S. tax as expatriates;
●
a foreign corporation; or
●
an estate or trust that is not a U.S. holder.
129
Taxation of Distributions
.
If we pay distributions in cash or other property (other than certain distributions of our stock or rights to acquire our stock) to Non-U.S.
holders of common stock, to the extent paid out of our current or accumulated earnings and profits (as determined under U.S. federal income
tax principles), such distribution will constitute a dividend for U.S. federal income tax purposes and, provided such dividend is not
effectively connected with the Non-U.S. holder's conduct of a trade or business within the United States, we or the applicable withholding
agent will be required to withhold tax from the gross amount of the dividend at a rate of 30 percent (30%), unless such Non-U.S. holder
is eligible for a reduced rate of withholding tax under an applicable income tax treaty and provides proper certification of its eligibility
for such reduced rate (usually on an IRS Form W-8BEN or W-8BEN-E). Any distribution not constituting a dividend will be treated first
as reducing (but not below zero) the Non-U.S. holder's adjusted tax basis in its shares of common stock and, to the extent such
distribution exceeds the Non-U.S. holder's adjusted tax basis, as gain realized from the sale or other disposition of the shares
of common stock, which will be treated as described below under the section titled "
Gain on Sale, Taxable Exchange or Other Taxable
Disposition of Shares of Common Stock
.".
The withholding tax described
in the preceding paragraph does not apply to dividends paid to a Non-U.S. holder who provides an IRS Form W-8ECI certifying that
the dividends are effectively connected with the Non-U.S. holder's conduct of a trade or business within the United States. Instead,
the effectively connected dividends will be subject to regular U.S. federal income tax as if the Non-U.S. holder were a U.S. resident,
subject to an applicable income tax treaty providing otherwise. A Non-U.S. holder that is a corporation for U.S. federal income tax purposes
and is receiving effectively connected dividends may also be subject to an additional "branch profits tax" imposed at a rate
of 30 percent (30%) (or a lower applicable income tax treaty rate).
Gain on Sale, Taxable Exchange
or Other Taxable Disposition of Shares of Common Stock
. Upon a sale or other taxable disposition of common stock, subject to the discussion
of backup withholding and FATCA below, a Non-U.S. holder generally will not be subject to U.S. federal income or withholding tax in respect
of the sale or disposition, unless:
●
the
gain is effectively connected with the conduct of a trade or business by the Non-U.S. holder within the United States (and, under certain
income tax treaties, is attributable to a United States permanent establishment or fixed base maintained by the Non-U.S. holder);
●
such Non-U.S. holder is an individual who is present in the United States for 183 days or more during the taxable year in which the disposition takes place and certain other conditions are met; or
●
we are or have been a "United States real property holding corporation" for U.S. federal income tax purposes at any time during the shorter of the five-year period ending on the date of disposition or the period that the Non-U.S. holder held shares of common stock and, in the circumstance in which shares of common stock are regularly traded on an established securities market, the Non-U.S. holder has owned, directly or constructively, more than five percent (5%) of the issued and outstanding shares of common stock at any time within the shorter of the five-year period preceding the sale or other disposition or such Non-U.S. holder's holding period for the shares of common stock. There can be no assurance that shares of common stock will be treated as regularly traded on an established securities market for this purpose.
Unless an applicable treaty
provides otherwise, gain described in the first bullet point above will be subject to tax at generally applicable U.S. federal income
tax rates as if the Non-U.S. holder were a U.S. resident. Any gains described in the first bullet point above of a Non-U.S. holder that
is a corporation for U.S. federal income tax purposes may also be subject to an additional "branch profits tax" at a 30 percent
(30%) rate (or lower income tax treaty rate). If the second bullet point applies to a Non-U.S. holder, such Non-U.S. holder will be subject
to U.S. tax on such Non-U.S. holder's net capital gain for such year (including any gain realized in connection with the redemption)
at a tax rate of 30 percent (30%).
If the third bullet point
above applies to a Non-U.S. holder, gain recognized by such holder in the redemption will be subject to tax at generally applicable U.S.
federal income tax rates. In addition, we or an applicable withholding agent may be required to withhold U.S. federal income tax at a
rate of fifteen percent (15%) of the amount realized upon such sale or other taxable disposition. We believe that we are not, and have
not been at any time since our formation, a United States real property holding corporation and we do not expect to be a United States
real property holding corporation immediately after a business combination is completed.
130
Information Reporting and Backup Withholding
Dividend payments with respect
to shares of common stock and proceeds from the sale, taxable exchange or taxable disposition of shares of common stock may be subject
to information reporting to the IRS and possible United States backup withholding. Backup withholding will not apply, however, to a U.S.
holder who furnishes a correct taxpayer identification number and makes other required certifications, or who is otherwise exempt from
backup withholding and establishes such exempt status.
Amounts treated as dividends
that are paid to a Non-U.S. holder are generally subject to reporting on IRS Form 1042-S even if the payments are exempt from withholding.
A Non-U.S. holder generally will eliminate any other requirement for information reporting and backup withholding by providing certification
of its foreign status, under penalties of perjury, on a duly executed applicable IRS Form W-8 or by otherwise establishing an exemption.
Backup withholding is not
an additional tax. Amounts withheld as backup withholding may be credited against a holder's United States federal income tax liability,
and a holder generally may obtain a refund of any excess amounts withheld under the backup withholding rules by timely filing the appropriate
claim for refund with the IRS and furnishing any required information.
FATCA Withholding Taxes
Sections 1471 through 1474
of the Code and the Treasury Regulations and administrative guidance promulgated thereunder (commonly referred to as "FATCA")
impose withholding of 30 percent (30%) on payments of dividends on shares of common stock. In general, no such withholding will be required
with respect to a U.S. holder or an individual Non-U.S. holder that timely provides the certifications required on a valid IRS Form W-9 or
W-8BEN, respectively. Holders potentially subject to withholding include "foreign financial institutions" (which is broadly
defined for this purpose and in general includes investment vehicles) and certain other non-U.S. entities unless various U.S. information
reporting and due diligence requirements (generally relating to ownership by U.S. persons of interests in or accounts with those entities)
have been satisfied, or an exemption applies (typically certified as to by the delivery of a properly completed IRS Form W-8BEN-E). If
FATCA withholding is imposed, a beneficial owner that is not a foreign financial institution generally will be entitled to a refund of
any amounts withheld by filing a U.S. federal income tax return (which may entail significant administrative burden). Foreign financial
institutions located in jurisdictions that have an intergovernmental agreement with the United States governing FATCA may be subject to
different rules. Non-U.S. holders should consult their tax advisers regarding the effects of FATCA on dividends paid with respect to shares
of common stock.
131
SECURITIES ACT RESTRICTIONS ON RESALE OF OUR
SECURITIES
Pursuant to Rule 144 under
the Securities Act ("Rule 144"), a person who has beneficially owned restricted our Class A Common Stock, Class B Common Stock,
or our Warrants for at least six months would be entitled to sell their securities provided that (i) such person is not deemed to have
been our affiliate at the time of, or at any time during the three months preceding, a sale and (ii) we are subject to the Exchange Act
periodic reporting requirements for at least three months before the sale and have filed all required reports under Section 13 or 15(d)
of the Exchange Act during the 12 months (or such shorter period as the Company was required to file reports) preceding the sale.
Persons who have beneficially
owned restricted Class A Common Stock, Class B Common Stock, or our Warrants for at least six months but who are our affiliates at the
time of, or at any time during the three months preceding, a sale, would be subject to additional restrictions, by which such person would
be entitled to sell within any three-month period only a number of securities that does not exceed the greater of:
●
1% of the total number of shares of our Class A Common Stock then outstanding;
●
The average weekly reported trading volume of our Class A Common Stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale.
Sales by our affiliates under
Rule 144 are also limited by manner of sale provisions and notice requirements and to the availability of current public information about
us.
Restrictions on the Use of Rule 144 by Shell
Companies or Former Shell Companies
Rule 144 is not available
for the resale of securities initially issued by shell companies (other than business combination related shell companies) or issuers
that have been at any time previously a shell company. However, Rule 144 also includes an important exception to this prohibition if the
following conditions are met:
●
the issuer of the securities that was formerly a shell company has ceased to be a shell company;
●
the issuer of the securities is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act;
●
the issuer of the securities has filed all Exchange Act reports and material required to be filed, as applicable, during the preceding 12 months (or such shorter period that the issuer was required to file such reports and materials), other than Current Reports on Form 8-K; and
●
at least one year has elapsed from the time that the issuer filed current Form 10 type information with the SEC reflecting its status as an entity that is not a shell company.
As a result, the Sponsor will
be able to sell their Founder Shares and Private Placement Warrants, as applicable, pursuant to Rule 144 without registration one year
after the Purchase.
Following the recent completion
of the Purchase, the Company is no longer a shell company, and, once the conditions set forth in the exceptions listed above are satisfied,
Rule 144 will become available for the resale of the above noted restricted securities.
132
PLAN OF DISTRIBUTION
We are registering the resale by the Selling Securityholders of up
to an aggregate an aggregate of 5,079,050 shares of our Class A Common Stock consisting of (i) up to 5,000,000 ELOC Shares, (ii) 69,050
Exchange Shares, and (iii) 10,000 Service Shares.
The Selling Securityholders
and any of their pledgees, donees, assignees and successors-in-interest may, from time to time sell any or all of its shares of Class
A Common Stock being offered under this prospectus on any stock exchange, market or trading facility on which our Class A Common Stock
is traded or in private transactions. These sales may be at fixed or negotiated prices. The Selling Securityholders may use any one or
more of the following methods when disposing of the shares of Class A Common Stock:
●
ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;
●
block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;
●
purchases by a broker-dealer as principal and resales by the broker-dealer for its account;
●
an exchange distribution in accordance with the rules of the applicable exchange;
●
privately negotiated transactions;
●
to cover short sales made after the date that the registration statement of which this prospectus is a part is declared effective by the SEC;
●
broker-dealers may agree with the Selling Securityholders to sell a specified number of such shares at a stipulated price per share;
●
through trading plans entered into by a Selling Securityholder pursuant to Rule 10b5-1 under the Exchange Act that are in place at the time of an offering pursuant to this prospectus and any applicable prospectus supplement hereto that provide for periodic sales of their securities on the basis of parameters described in such trading plans;
●
through one or more underwritten offerings on a firm commitment or best efforts basis;
●
in "at the market" offerings, as defined in Rule 415 under the Securities Act, at negotiated prices, at prices prevailing at the time of sale or at prices related to such prevailing market prices, including sales made directly on a national securities exchange or sales made through a market maker other than on an exchange or other similar offerings through sales agents;
●
through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise;
●
through the distributions by any Selling Securityholder or its affiliates to its partners, members or stockholders;
●
a combination of any of these methods of sale; and
●
any other method permitted pursuant to applicable law.
The shares of Class A Common
Stock may also be sold under Rule 144 under the Securities Act, or any other exemption from registration under the Securities Act, if
available for the Selling Securityholders, rather than under this prospectus. The Selling Securityholders have the sole and absolute discretion
not to accept any purchase offer or make any sale of shares of Class A Common Stock if it deems the purchase price to be unsatisfactory
at any particular time.
The Selling Securityholders
may pledge their shares of Class A Common Stock to their brokers under the margin provisions of customer agreements. If the Selling Securityholders
default on a margin loan, the broker may, from time to time, offer and sell the pledged shares.
Broker-dealers engaged by
the Selling Securityholders may arrange for other broker-dealers to participate in sales. Broker-dealers may receive commissions or discounts
from the Selling Securityholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to
be negotiated, which commissions as to a particular broker or dealer may be in excess of customary commissions to the extent permitted
by applicable law.
133
If sales of shares of Class
A Common Stock offered under this prospectus are made to broker-dealers as principals, we would be required to file a post-effective amendment
to the registration statement of which this prospectus is a part. In the post-effective amendment, we would be required to disclose the
names of any participating broker-dealers and the compensation arrangements relating to such sales.
White Lion is an underwriter
within the meaning of Section 2(a)(11) of the Securities Act and any broker-dealers or agents that participate in distribution of the
securities will also be underwriters within the meaning of Section 2(a)(11) of the Securities Act, and any profit on sale of the securities
by them and any discounts, commissions or concessions received by them will be underwriting discounts and commissions under the Securities
Act. The other Selling Securityholders and any broker-dealers or agents that are involved in selling the securities may be deemed to be
"underwriters" within the meaning of the Securities Act in connection with such sales. In such event, any commissions received
by such broker-dealers or agents and any profit on the resale of the securities purchased by them may be deemed to be underwriting commissions
or discounts under the Securities Act. White Lion has informed us that each such broker-dealer participating in a distribution of securities
by White Lion may receive commissions from White Lion and, if so, such commissions will not exceed customary brokerage commissions. Each
Selling Securityholder has informed us that it does not have any written or oral agreement or understanding, directly or indirectly, with
any person to distribute the securities. The compensation paid to any such particular broker-dealer or agent by any such purchasers of
shares of our Class A Common Stock sold by White Lion or any other Selling Securityholder may be less than or in excess of customary commissions.
None of us, White Lion or the other Selling Securityholders can presently estimate the amount of compensation that any such broker-dealer
or agent will receive from any purchasers of shares of our Class A Common Stock sold by White Lion or the other Selling Securityholders.
White Lion has informed us
that it intends to use one or more registered broker-dealers (one of which is an affiliate of White Lion) to effectuate all sales, if
any, of our Class A Common Stock that it may acquire from us pursuant to the Common Stock Purchase Agreement. Such sales will be made
at prices and at terms then prevailing or at prices related to the then current market price. Each such registered broker-dealer will
be an underwriter within the meaning of Section 2(a)(11) of the Securities Act. White Lion has informed us that each such broker-dealer
may receive commissions from White Lion and, if so, such commissions will not exceed customary brokerage commissions.
We know of no existing arrangements
between White Lion or any other stockholder, broker, dealer, underwriter or agent relating to the sale or distribution of the shares of
our Class A Common Stock offered by this prospectus.
We also have agreed to indemnify
White Lion and certain other persons against certain liabilities in connection with the offering of shares of our Class A Common Stock
offered hereby, including liabilities arising under the Securities Act or, if such indemnity is unavailable, to contribute amounts required
to be paid in respect of such liabilities. White Lion has agreed to indemnify us against liabilities under the Securities Act that may
arise from certain written information furnished to us by White Lion specifically for use in this prospectus or, if such indemnity is
unavailable, to contribute amounts required to be paid in respect of such liabilities. Insofar as indemnification for liabilities arising
under the Securities Act may be permitted to our directors, officers, and controlling persons, we have been advised that in the opinion
of the SEC this indemnification is against public policy as expressed in the Securities Act and is therefore, unenforceable.
134
White Lion has represented
to us that at no time prior to the date of the Common Stock Purchase Agreement has White Lion or its agents, representatives or affiliates
engaged in or effected, in any manner whatsoever, directly or indirectly, any short sale (as such term is defined in Rule 200 of Regulation
SHO of the Exchange Act) of our Class A Common Stock or any hedging transaction, which establishes a net short position with respect to
our Class A Common Stock. White Lion has agreed that during the term of the Common Stock Purchase Agreement, neither White Lion, nor any
of its agents, representatives or affiliates will enter into or effect, directly or indirectly, any of the foregoing transactions.
The Selling Securityholders
and any other persons participating in the sale or distribution of the shares of Class A Common Stock offered under this prospectus will
be subject to applicable provisions of the Exchange Act, and the rules and regulations under that act, including Regulation M. These provisions
may restrict activities of, and limit the timing of purchases and sales of any of the shares of Class A Common Stock by, the Selling Securityholders
or any other person. With certain exceptions, Regulation M precludes the Selling Securityholders, including White Lion, any affiliated
purchasers, and any broker-dealer or other person who participates in the distribution from bidding for or purchasing, or attempting to
induce any person to bid for or purchase any security which is the subject of the distribution until the entire distribution is complete.
Regulation M also prohibits any bids or purchases made in order to stabilize the price of a security in connection with the distribution
of that security. Furthermore, under Regulation M, persons engaged in a distribution of securities are prohibited from simultaneously
engaging in market making and other activities with respect to those securities for a specified period of time prior to the commencement
of such distributions, subject to specified exceptions or exemptions. All of these limitations may affect the marketability of the shares
of Class A Common Stock offered by this prospectus.
If any of the shares of Class
A Common Stock offered for sale pursuant to this prospectus are transferred other than pursuant to a sale under this prospectus, then
subsequent holders could not use this prospectus until a post-effective amendment or prospectus supplement is filed, naming such holders.
We offer no assurance as to whether the Selling Securityholder will sell all or any portion of the shares offered under this prospectus.
The shares of Class A Common
Stock will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws. In addition,
in certain states, the shares of Class A Common Stock covered hereby may not be sold unless they have been registered or qualified for
sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with.
We are required to pay certain
fees and expenses incurred incident to the registration of the securities. We have agreed to indemnify the Selling Securityholders, including
White Lion, against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.
We agreed to keep this prospectus
effective until the earlier of (i) all of the securities registered hereunder have been sold pursuant to this prospectus or Rule 144 under
the Securities Act or any other rule of similar effect, or (ii) they may be sold pursuant to Rule 144 without volume or manner-of-sale
restrictions, as determined by us. The Resale Securities will be sold only through registered or licensed brokers or dealers if required
under applicable state securities laws. In addition, in certain states, the resale securities covered hereby may not be sold unless they
have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement
is available and is complied with.
135
LEGAL MATTERS
The legality of the issuance
of the shares offered in this prospectus will be passed upon for us by Pryor Cashman LLP, New York, New York. Pryor Cashman LLP beneficially
owns 1,200,000 shares of our Class A Common Stock, subject to the beneficial ownership limitation of 4.99% associated with the warrants
to purchase common stock issued for services rendered.
EXPERTS
The consolidated financial
statements of EON Resources Inc. (f/k/a HNR Acquisition Corp) as of December 31, 2023 (Successor) and 2022 (Predecessor), and for each
of the period from November 15, 2023 to December 31, 2023 (Successor), the period from January 1, 2023 to November 14, 2023 (Predecessor)
and the year ended December 31, 2022 (Predecessor) appearing in this prospectus have been audited by Marcum LLP, an independent registered
public accounting firm, as set forth in their report (which includes an explanatory paragraph relating to EON Resources Inc.'s ability
to continue as a going concern) appearing elsewhere in this prospectus, and are included in reliance upon such report given on the authority
of such firm as experts in accounting and auditing.
Estimates of the Company's
oil and natural gas reserves and related future net cash flows and present values thereof for the years December 31, 2023 and 2022 appearing
in this prospectus were prepared by the third-party independent petroleum engineering firm of William M. Cobb & Associates, Inc.,
summary letters of which are incorporated by reference herein. We have incorporated these estimates in reliance on the authority of such
firm as an expert in such matters.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC
a registration statement on Form S-1 under the Securities Act with respect to the securities we are offering by this prospectus.
This prospectus does not contain all of the information included in the registration statement. For further information about us and our
securities, you should refer to the registration statement and the exhibits and schedules filed with the registration statement. Whenever
we make reference in this prospectus to any of our contracts, agreements or other documents, the references are materially complete but
may not include a description of all aspects of such contracts, agreements or other documents, and you should refer to the exhibits attached
to the registration statement for copies of the actual contract, agreement or other document.
Upon the effectiveness of
this registration statement of which this prospectus is a part, we will be subject to the information requirements of the Exchange Act
and will file annual, quarterly and current event reports, proxy statements and other information with the SEC. You can read our SEC filings,
including the registration statement, over the Internet at the SEC's website at
www.sec.gov
. You may also read and copy
any document we file with the SEC at its public reference facility at 100 F Street, N.E., Washington, D.C. 20549.
You may also obtain copies
of the documents at prescribed rates by writing to the Public Reference Section of the SEC at 100 F Street, N.E., Washington, D.C. 20549.
Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference facilities.
136
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
EON RESOURCES INC.
(F/K/A HNR ACQUISITION CORP)
Audited Consolidated Financial Statements as of December 31, 2023 and 2022:
Report of Independent Registered Public Accounting Firm (PCAOB ID#688)
F-2
Consolidated Balance Sheets as of December 31, 2023 and 2022
F-3
Consolidated Statements of Operations for the Years Ended December 31, 2023 and 2022
F-4
Consolidated Statements of Changes in Stockholders' Equity for the Years Ended December 31, 2023 and 2022
F-5
Consolidated Statements of Cash Flows for the Years Ended December 31, 2023 and 2022
F-6
Notes to Consolidated Financial Statements for the Years Ended December 31, 2023 and 2022
F-7
Unaudited Consolidated Financial Statements for the Nine Months ended September 30, 2024 and 2023:
Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023
F-37
Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2024 and 2023
F-38
Consolidated Statements of Changes in Stockholders' Equity for the Nine Months Ended June 30, 2024 and 2023
F-39
Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2024 and 2023
F-40
Notes to Consolidated Financial Statements for the Nine Months Ended September 30, 2024 and 2023
F-41
F-
1
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRMM
To the Shareholders and Board of Directors of
EON Resources Inc. (f/k/a HNR Acquisition Corp)
Opinion on the Financial Statements
We have audited the accompanying consolidated
balance sheets of EON Resources Inc. (f/k/a HNR Acquisition Corp) (the "Company") as of December 31, 2023 (Successor)
and December 31, 2022 (Predecessor), the related consolidated statements of operations, stockholders' equity (deficit) and
cash flows for each of the period from November 15, 2023 to December 31, 2023 (Successor), the period from January 1, 2023 to November
14, 2023 (Predecessor) and the year ended December 31, 2022 (Predecessor), and the related notes (collectively referred to as the
"financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial
position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for the period from
November 15, 2023 to December 31, 2023, the period from January 1, 2023 to November 14, 2023 and the year ended December 31,
2022, in conformity with accounting principles generally accepted in the United States of America.
Explanatory Paragraph – Going Concern
The accompanying consolidated financial statements
have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 1, the Company has
a significant working capital deficiency and needs to raise additional funds to meet its obligations and sustain its operations. These
conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters
are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome
of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on the Company's financial statements based on our audit
s
. We are a public
accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to
be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations
of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB
Those standards require that we plan and perform the audit
s
to obtain reasonable assurance about whether the financial statements
are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform,
an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal
control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control
over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess
the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond
to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating
the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Marcum
llp
Marcum
llp
We have served as the Company's auditor since 2022
.
Houston, Texas
May 2, 2024
F-
2
EON RESOURCES INC.
F/K/A HNR ACQUISITION CORP
CONSOLIDATED BALANCE SHEETS
December 31,
2023
December 31,
2022
ASSETS
Successor
Predecessor
Cash
$
3,505,454
$
2,016,315
Accounts receivable
Crude oil and natural gas
2,103,341
2,862,945
Other
90,163
201,669
Short-term derivative instrument asset
391,488
-
Prepaid expenses and other current assets
722,002
395,204
Total current assets
6,812,448
5,476,133
Crude oil and natural gas properties, successful efforts method:
Proved properties
94,189,372
64,799,213
Accumulated depreciation, depletion, amortization and impairment
(
352,127
)
(
9,592,296
)
Total oil and natural gas properties, net
93,837,245
55,206,917
Other property, plant and equipment, net
-
83,004
Operating lease assets, net of accumulated depreciation
-
126,678
Note and interest receivable – related party
-
3,809,003
Other noncurrent assets
-
6,668
Long-term derivative instrument asset
76,199
-
Total assets
$
100,725,892
$
64,708,403
LIABILITIES AND STOCKHOLDERS'  EQUITY
Current liabilities
Accounts payable
$
4,795,208
$
1,218,054
Accrued liabilities and other
4,422,183
1,128,671
Revenue and royalties payable
461,773
617,163
Revenue and royalties payable – related parties
1,523,138
-
Deferred underwriting fee payable
1,300,000
-
Short-term derivative instrument liabilities
-
1,191,354
Related party notes payable, net of discount
2,359,048
-
Current portion of operating lease liabilities
-
70,232
Current portion of long-term debt
4,157,602
-
Forward purchase agreement liability
1,094,097
-
Total current liabilities
20,113,049
4,225,474
Long-term debt, net of current portion and discount
37,486,206
26,750,000
Warrant liability
4,777,971
-
Deferred tax liability
6,163,140
-
Operating lease liabilities
-
58,921
Asset retirement obligations
904,297
4,494,761
Other liabilities
675,000
675,000
Total for non-current liabilities
50,006,614
31,978,682
Total liabilities
70,119,663
36,204,156
Commitments and Contingencies (Note 6)
Stockholders'  equity
Preferred stock, $
0.0001
par value;
1,000,000
authorized shares,
0
shares issued and outstanding at December 31, 2023 and December 31, 2022, respectively
-
-
Class A common stock, $
0.0001
par value;
100,000,000
authorized shares,
5,235,131
shares issued and outstanding at December 31, 2023
524
-
Class B common stock, $
0.0001
par value;
20,000,000
authorized shares,
1,800,000
shares issued and outstanding at December 31, 2023
180
Additional paid-in capital
16,317,856
-
Owners' equity
-
28,504,247
Accumulated deficit
(
19,118,745
)
-
Total stockholders' (deficit) equity attributable to EON Resources Inc.
(
2,800,185
)
28,504,247
Noncontrolling interest
33,406,414
-
Total stockholders' equity
30,606,229
28,504,247
Total liabilities and stockholders' equity
$
100,725,892
$
64,708,403
The accompanying notes are an integral part of
these consolidated financial statements.
F-
3
EON RESOURCES INC.
F/K/A HNR ACQUISITION CORP
CONSOLIDATED STATEMENTS OF OPERATIONS
Successor
Predecessor
November 15,
2023 to
December 31,
2023
January 1,
2023 to
November 14,
2023
Year Ended
December 31,
2022
Revenues
Crude oil
$
2,513,197
$
22,856,521
$
37,982,367
Natural gas and natural gas liquids
70,918
809,553
1,959,411
Gain (loss) on derivative instruments, net
340,808
51,957
(
4,793,790
)
Other revenue
50,738
520,451
255,952
Total revenues
2,975,661
24,238,482
35,403,940
Expenses
Production taxes, transportation and processing
226,062
2,117,800
3,484,477
Lease operating
1,453,367
8,692,752
8,418,739
Depletion, depreciation and amortization
352,127
1,497,749
1,613,402
Accretion of asset retirement obligations
11,062
848,040
1,575,296
General and administrative
3,553,117
3,700,267
2,953,202
Acquisition costs
9,999,860
-
-
Total expenses
15,595,595
16,856,608
18,045,116
Operating income (loss)
(
12,619,934
)
7,381,874
17,358,824
Other Income (expenses)
Net loss on asset sales and impairment
-
(
816,011
)
-
Change in fair value of warrant liability
187,704
-
-
Change in fair value of forward purchase agreement liability
3,268,581
-
-
Amortization of debt discount
(
1,191,553
)
-
-
Interest expense
(
1,043,312
)
(
1,834,208
)
(
1,076,060
)
Interest income
6,736
313,401
-
Insurance policy recovery
-
-
2,000,000
Other Income (expense)
2,937
(
74,193
)
13,238
Total other income (expenses)
1,231,093
(
2,411,011
)
937,178
Income (loss) before income taxes
(
11,388,841
)
4,970,863
18,296,002
Income tax provision
2,387,639
-
-
Net income (loss)
(
9,001,202
)
4,970,863
18,296,002
Net income (loss) attributable to noncontrolling interests
-
-
-
Net income (loss) attributable to EON Resources Inc.
$
(
9,001,202
)
$
4,970,863
$
18,296,002
Weighted average share outstanding, common stock - basic and diluted
5,235,131
-
-
Net income (loss) per share of common stock – basic and diluted
$
(
1.72
)
$
-
$
-
The accompanying notes are an integral part of
these consolidated financial statements.
F-
4
EON RESOURCES INC.
F/K/A HNR ACQUISITION CORP
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
Predecessor
Owner's Equity
Balance at December 31, 2021
$
12,201,851
Net income
18,296,002
Equity-based compensation
6,394
Distributions
(
2,000,000
)
Balance at December 31, 2022
28,504,247
Net income
4,970,863
Balance at November 14, 2023
$
33,475,110
Total
Stockholders'
Non-redeemable
Class A
Class B
Additional
(Deficit) Equity
Attributable to
EON
Total
Stockholders'
Common
    Stock
Common
    Stock
Common
    Stock
Paid-In
Accumulated
Resources
Noncontrolling
(Deficit)
Successor
Shares
Amount
Shares
Amount
Shares
Amount
Capital
Deficit
Inc.
Interest
Equity
Balance – November 15, 2023
3,457,813
$
346
-
$
-
-
$
-
$
(
9,719,485
)
$
(
10,079,371
)
$
(
19,798,510
)
$
-
$
(
19,798,510
)
Reclassification of shares under
    two class structure and non-redemptions
(
3,457,813
)
(
346
)
3,457,813
346
-
-
-
-
-
-
-
Excise tax imposed on common stock
    redemptions
-
-
-
-
-
-
-
(
38,172
)
(
38,172
)
-
(
38,172
)
Reclassification of Public Shares
    Not Redeemed
-
-
445,626
45
-
-
4,878,030
-
4,878,075
-
4,878,075
Non redemption Agreement
-
-
600,000
60
-
-
6,567,879
-
6,567,939
-
6,567,939
Shares not redeemer under Forward
    Purchase Agreement
-
-
140,070
14
-
-
1,533,272
-
1,533,286
-
1,533,286
Forward purchase agreement prepayment
-
-
-
-
-
-
8,190,554
-
8,190,554
-
8,190,554
Share-based compensation
-
-
381,622
38
-
-
3,445,927
-
3,445,965
-
3,445,965
Shares issued for Acquisition
-
-
210,000
21
1,800,000
180
1,421,679
-
1,421,880
33,406,414
34,828,294
Net loss
-
-
-
-
-
-
-
(
9,001,202
)
(
9,001,202
)
-
(
9,001,202
)
Balance – December 31,
    2023
-
$
-
5,235,131
$
524
1,800,000
$
180
$
16,317,856
$
(
19,118,745
)
$
(
2,800,185
)
$
33,406,414
$
30,606,229
The accompanying notes are an integral part of
these consolidated financial statements.
F-
5
EON RESOURCES INC.
F/K/A HNR ACQUISITION CORP
CONSOLIDATED STATEMENTS OF CASH FLOWS
Successor
Predecessor
November 15,
2023 to
December 31,
2023
January 1,
2023 to
November 14,
2023
Year Ended December 31,
2022
Operating activities:
Net income
$
(
9,001,202
)
$
4,970,863
$
18,296,002
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion, and amortization expense
352,127
1,497,749
1,613,402
Accretion of asset retirement obligations
11,062
843,865
1,575,296
Equity-based compensation
3,445,965
-
6,394
Deferred income tax benefit
(
2,365,632
)
-
-
Amortization of operating lease right-of-use assets
-
(
403
)
(
329
)
Amortization of debt issuance costs
1,191,553
3,890
3,676
Change in fair value of unsettled derivatives
(
443,349
)
(
1,215,693
)
(
2,185,000
)
Change in fair value of warrant liability
(
187,704
)
-
-
Change in fair value of forward purchase agreement
(
3,268,581
)
-
-
Change in other property, plant, and equipment, net
-
83,004
-
(Gain) loss on sale of assets
-
816,011
-
Changes in operating assets and liabilities:
Accounts receivable
1,793,055
(
921,945
)
(
243,940
)
Prepaid expenses and other assets
(
258,431
)
26,833
(
132,809
)
Related party note receivable interest income
-
(
313,401
)
-
Accounts payable and accrued liabilities
7,953,598
1,480,138
148,143
Accrued liabilities
1,251,677
753,595
1,707,701
Royalties payable
(
313,381
)
157,991
10,248
Royalties payable – related party
323,717
8,066
(
2,147,652
)
Net cash provided by operating activities
484,474
8,190,563
18,651,132
Investing activities:
Development of crude oil and gas properties
(
238,499
)
(
6,769,557
)
(
16,891,856
)
Acquisition of business, net of cash acquired
(
30,827,804
)
-
-
Trust Account withdrawals
49,362,479
-
-
Issuance of related party note receivable
-
(
190,998
)
(
3,809,003
)
Net cash provided by (used in) investing activities
18,296,176
(
6,960,555
)
(
20,700,859
)
Financing activities:
Proceeds from issuance of long-term debt
28,000,000
-
8,000,000
Payment of debt issuance costs
(
808,992
)
-
(
3,000,000
)
Repayments of long-term debt
(
319,297
)
(
3,000,000
)
-
Member distributions
-
-
(
2,000,000
)
Repayment of related party notes payable
-
-
-
Redemptions of common stock
(
44,737,839
)
-
-
Net cash provided by (used in) financing activities
(
17,866,128
)
(
3,000,000
)
3,000,000
Net change in cash and cash equivalents
914,522
(
1,769,992
)
950,273
Cash and cash equivalents at beginning of period
2,590,932
2,016,315
1,066,042
Cash and cash equivalents at end of period
$
3,505,454
$
246,323
$
2,016,315
Cash paid during the period for:
Interest on debt
$
370,625
$
2,002,067
$
847,968
Income taxes
$
154,000
$
-
$
-
Amounts included in the measurement of operating lease liabilities
$
-
$
56,625
$
151,655
Supplemental disclosure of non-cash investing and financing activities:
Operating lease assets obtained in exchange for operating lease obligations
$
-
$
-
$
46,528
Impact to right-of-use assets and lease liabilities due to lease modification
$
-
$
-
$
50,921
Accrued purchases of property and equipment at period end
$
141,481
$
256,237
$
663,954
The accompanying notes are an integral part of
these consolidated financial statements.
F-
6
EON RESOURCES INC.
F/K/A HNR ACQUISITION CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 — DESCRIPTION OF ORGANIZATION AND BUSINESS
OPERATIONS
Organization and General
ENO Resources Inc. (f/k/a HNR Acquisition Corp)
(the "Company") was incorporated in Delaware on December 9, 2020. The Company was a blank check company formed for the
purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination
with one or more businesses (the "Business Combination"). The Company is an "emerging growth company," as defined
in Section 2(a) of the Securities Act of 1933, as amended, or the "Securities Act," as modified by the
Jumpstart Our Business Startups Act of 2012 (the "JOBS Act").
The registration statement for the Company's
IPO was declared effective on February 10, 2022 (the "Effective Date"). On February 15, 2022, the Company consummated the
IPO of
7,500,000
units (the "Units" and, with respect to the common stock included in the Units sold, the "Public Shares"),
at $
10.00
per Unit. Additionally, the underwriter fully exercised its option to purchase
1,125,000
additional Units. Simultaneously with
the closing of the IPO, the Company consummated the sale of
505,000
units (the "Private Placement Units") at a price of $
10.00
per unit generating proceeds of $
5,050,000
in a private placement to HNRAC Sponsors, LLC, the Company's sponsor (the "Sponsor")
and EF Hutton (formerly Kingswood Capital Markets) ("EF Hutton").
The Sponsor and other parties, purchased, in
the aggregate,
505,000
units ("Private Placement Units") at a price of $
10.00
per Private Placement Unit in a private placement
which included a share of common stock and warrant to purchase three quarters of
one
share of common stock at an exercise price of $
11.50
per share, subject to certain adjustments ("Private Placement Warrants" and together, the "Private Placement")
that occurred immediately prior to the Public Offering.
Effective November 15,
2023, the Company completed its business combination as described in Note 3. Through its subsidiary Pogo Resources, LLC, a Texas limited
liability Company "("Pogo" or "Pogo Resources") and its subsidiary LH Operating, LLC, a Texas limited liability
company "("LHO"), the Company is an independent oil and natural gas company focused on the acquisition, development,
exploration, and production of oil and natural gas properties in the Permian Basin. The Permian Basin is located in west Texas and southeastern
New Mexico and is characterized by high oil and liquids-rich natural gas content, multiple vertical and horizontal target horizons, extensive
production histories, long-lived reserves and historically high drilling success rates. The Company's properties are in the Grayburg-Jackson
Field in Eddy County, New Mexico, which is a sub-area of the Permian Basin. The Company focuses exclusively on vertical development drilling.
Inflation Reduction Act of 2022
On August 16, 2022, the Inflation Reduction Act
of 2022 (the "IR Act") was signed into federal law. The IR Act provides for, among other things, a new U.S. federal
1
% excise
tax on certain repurchases (including redemptions) of stock by publicly traded U.S. domestic corporations and certain U.S. domestic subsidiaries
of publicly traded foreign corporations occurring on or after January 1, 2023. The excise tax is imposed on the repurchasing corporation
itself, not its stockholders from which shares are repurchased. The amount of the excise tax is generally
1
% of the fair market value
of the shares repurchased at the time of the repurchase. However, for purposes of calculating the excise tax, repurchasing corporations
are permitted to net the fair market value of certain new stock issuances against the fair market value of stock repurchases during the
same taxable year. In addition, certain exceptions apply to the excise tax. The U.S. Department of the Treasury (the "Treasury")
has been given authority to provide regulations and other guidance to carry out and prevent the abuse or avoidance of the excise tax.
Any redemption or other repurchase that occurs
after December 31, 2022, in connection with a Business Combination, extension vote or otherwise, may be subject to the excise tax. Whether
and to what extent the Company would be subject to the excise tax in connection with a Business Combination, extension vote or otherwise
would depend on a number of factors, including (i) the fair market value of the redemptions and repurchases in connection with the Business
Combination, extension or otherwise, (ii) the structure of a Business Combination, (iii) the nature and amount of any "PIPE"
or other equity issuances in connection with a Business Combination (or otherwise issued not in connection with a Business Combination
but issued within the same taxable year of a Business Combination) and (iv) the content of regulations and other guidance from the Treasury.
In addition, because the excise tax would be payable by the Company and not by the redeeming holder, the mechanics of any required payment
of the excise tax have not been determined. The foregoing could cause a reduction in the cash available on hand to complete a Business
Combination and in the Company's ability to complete a Business Combination.
F-
7
On May 11, 2023, in connection with the stockholder
vote for the amendment to the Company's certificate of incorporation, a total of
4,115,597
Public Shares for an aggregate redemption
amount of $
43,318,207
were redeemed from the Trust Account by the stockholders of the Company. On November 15, 2023, a total of
3,323,707
Public Shares were redeemed for an aggregate redemption amount of $
12,346,791
. As a result of these redemptions of common stock, the
Company recognized an estimated liability for the excise tax of $
474,837
, included in
Accrued liabilities and other
on the Company's
consolidated balance sheet pursuant to the
1
% excise tax under the IR Act partially offset by issuance of common stock subsequent to
the redemptions. The liability does not impact the consolidated statements of operations and is offset against accumulated deficit.
Going Concern Considerations
At December 31, 2023, the Company had
$
3,505,454
in cash and a working capital deficit of $
13,300,601
. These conditions raise substantial doubt about the Company's
ability to continue as a going concern within one year after the date that the financial statements are issued. The Company had
positive cash flow from operations of $
8,675,037
for the year ended December 31, 2023, on a pro forma basis of the combined
Successor
and
Predecessor
periods. Additionally, 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. 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 the Company's Form S-1 Registration Statement, which is in the review process, being declared effective by the
Securities and Exchange Commission ("SEC").
The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
NOTE 2 — SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Basis of Presentation
On November 15, 2023 (the "Closing Date"),
the Company consummated a business combination which resulted in the acquisition of Pogo Resources, LLC, a Texas limited liability
Company "("Pogo" or "Pogo Resources") and its subsidiary LH Operating, LLC, a Texas limited liability company
"("LHO", and collectively, the Pogo Business") (the "Acquisition"). The Company was deemed the accounting
acquirer in the Acquisition based on an analysis of the criteria outlined in Accounting Standards Codification ("ASC") 805,
Business Combinations, and the Pogo Business was deemed to be the Predecessor entity. Accordingly, the historical consolidated financial
statements of the Pogo Business became the historical financial statements of the Company's upon consummation of the Acquisition.
As a result, the financial statements included in this report reflect (i) the historical operating results of Pogo Business prior to
the Acquisition ("Predecessor") and (ii) the combined results of the companies, including Pogo Business following the closing
of the Acquisition ("Successor"). The accompanying financial statements include a Predecessor period, which was the period
January 1, 2023 through November 14, 2023, concurrent with completion of the Acquisition and Successor period from November 15, 2023
through December 31, 2023. As a result of the Acquisition, the results of operations, financial position and cash flows of the Predecessor
and Successor may not be directly comparable. A black-line between the Successor and Predecessor periods has been placed in the consolidated
financial statements and in the tables to the notes to the consolidated financial statements to highlight the lack of comparability between
these two periods as the Acquisition resulted in a new basis of accounting for the Pogo Business. See Note 3 for additional information.
F-
8
The accompanying financial statements are presented
in U.S. dollars in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP")
and pursuant to the rules and regulations of the SEC.
Principles of Consolidation
The accompanying consolidated financial statements
include the accounts of the Company and its subsidiaries. All significant intercompany balances and transactions have been eliminated
in consolidation.
Emerging Growth Company
Section 102(b)(1) of the JOBS Act exempts
emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that
is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered
under the Securities Exchange Act of 1934) are required to comply with the new or revised financial accounting standards.
The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply
to non-emerging growth companies but any such an election to opt out is irrevocable. The Company has elected not to opt out of such extended
transition period which means that when a standard is issued or revised and it has different application dates for public or private
companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the
new or revised standard. This may make comparison of the Company's consolidated financial statements with another public company
which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period
difficult or impossible because of the potential differences in accounting standards used.
Net Income (Loss) Per Share:
Net income (loss) per share of common stock is
computed by dividing net income (loss) applicable to common stockholders by the weighted average number of shares of common stock outstanding
during the period, excluding shares of common stock subject to forfeiture.
The Company's Class B Common shares do
not have economic rights to the undistributed earnings of the Company, and are not considered participating securities under ASC 260.
As such, they are excluded from the calculation of net income (loss) per common share.
The Company has not considered the effect of
the warrants sold in the Initial Public Offering and private placement warrants to purchase an aggregate of
6,847,500
shares
and warrants to purchase
4,094,250
shares issued in connection with Private Notes Payable in the calculation of diluted income per share,
since the effective of those instruments would be anti-dilutive. As a result, diluted income (loss) per share of common stock is
the same as basic loss per share of common stock for the period presented.
Use of Estimates
The preparation of financial statements in conformity
with GAAP requires the Company's management to make estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Significant estimates and assumptions reflected in the financial statements include: i) estimates
of proved reserves of oil and natural gas, which affect the calculation of depletion, depreciation, and amortization ("DD&A")
and impairment of proved oil and natural gas properties, ii) impairment of undeveloped properties and other assets, iii) depreciation
of property and equipment; and iv) the valuation of commodity derivative instruments. These estimates are based on information available
as of the date of the financial statements; therefore, actual results could differ materially from management's estimates using
different assumptions or under different conditions. Future production may vary materially from estimated oil and natural gas proved
reserves. Actual future prices may vary significantly from price assumptions used for determining proved reserves and for financial reporting.
Cash
The Company considers all cash on hand, depository
accounts held by banks, money market accounts and investments with an original maturity of three months or less to be cash equivalents.
The Company's cash and cash equivalents are held in financial institutions in amounts that exceed the insurance limits of the Federal
Deposit Insurance Corporation. The Company believes its counterparty risks are minimal based on the reputation and history of the institutions
selected.
F-
9
Accounts Receivable
Accounts receivable
consist of receivables from crude oil and natural gas purchasers and are generally uncollateralized. Accounts receivables are typically
due within 30 to 60 days of the production date and 30 days of the billing date and are stated at amounts due from purchasers
and industry partners. Amounts are considered past due if they have been outstanding for 60 days or more. No interest is typically
charged on past due amounts.
The Company reviews
its need for an allowance for doubtful accounts on a periodic basis and determines the allowance, if any, by considering the length of
time past due, previous loss history, future net revenues associated with the debtor's ownership interest in oil and natural gas
properties operated by the Company and the debtor's ability to pay its obligations, among other things. The Company believes its
accounts receivable are fully collectible. Accordingly, no allowance for doubtful accounts has been provided.
As of December 31,
2023 and 2022, the Company had approximately
96
% and
93
% of accounts receivable with two customers, respectively.
Crude Oil and Natural
Gas Properties
The Company accounts
for its crude oil and natural gas properties under the successful efforts method of accounting. Under this method, costs of proved developed
producing properties, successful exploratory wells and developmental dry hole costs are capitalized. Internal costs that are directly
related to acquisition and development activities, including salaries and benefits, are capitalized. Internal costs related to production
and similar activities are expensed as incurred. Capitalized costs are depleted by the unit-of-production method based on estimated proved
developed producing reserves. The Company calculates quarterly depletion expense by using the estimated prior period-end reserves as
the denominator. The process of estimating and evaluating crude oil and natural gas reserves is complex, requiring significant decisions
in the evaluation of available geological, geophysical, engineering, and economic data. The data for a given property may also change
substantially over time because of numerous factors, including additional development activity, evolving production history and a continual
reassessment of the viability of production under changing economic conditions. As a result, revisions in existing reserve estimates
occur. Capitalized development costs of producing oil and natural gas properties are depleted over proved developed reserves and leasehold
costs are depleted over total proved reserves. Upon the sale or retirement of significant portions of or complete fields of depreciable
or depletable property, the net book value thereof, less proceeds or salvage value, is recognized as a gain or loss.
Exploration costs, including
geological and geophysical expenses, seismic costs on unproved leaseholds and delay rentals are expensed as incurred. Exploratory well
drilling costs, including the cost of stratigraphic test wells, are initially capitalized, but charged to expense if the well is determined
to be economically nonproductive. The status of each in-progress well is reviewed quarterly to determine the proper accounting treatment
under the successful efforts method of accounting. Exploratory well costs continue to be capitalized so long as the Company has identified
a sufficient quantity of reserves to justify completion as a producing well, is making sufficient progress assessing reserves with economic
and operating viability, and the Company remains unable to make a final determination of productivity.
If an in-progress exploratory
well is found to be economically unsuccessful prior to the issuance of the financial statements, the costs incurred prior to the end
of the reporting period are charged to exploration expense. If the Company is unable to make a final determination about the productive
status of a well prior to issuance of the financial statements, the costs associated with the well are classified as suspended well costs
until the Company has had sufficient time to conduct additional completion or testing operations to evaluate the pertinent geological
and engineering data obtained. At the time the Company can make a final determination of a well's productive status, the well is
removed from suspended well status and the resulting accounting treatment is recorded.
F-
10
The Successor recognized depreciation, depletion, and amortization
expense totaling $
352,127
for the period from November 15, 2023 to December 31, 2023, and the Predecessor recognized $
1,497,749
for the
period from January 1, 2023 to November 14, 2023 and $
1,613,402
for the year ended December 31, 2022.
Impairment of Oil
and Gas Properties
Proved oil and natural
gas properties are reviewed for impairment when events and circumstances indicate a possible decline in the recoverability of the carrying
amount of such property. The Company estimates the expected future cash flows of its oil and natural gas properties and compares the
undiscounted cash flows to the carrying amount of the oil and natural gas properties, on a field-by-field basis, to determine if the
carrying amount is recoverable. If the carrying amount exceeds the estimated undiscounted future cash flows, the Company will write down
the carrying amount of the oil and natural gas properties to estimated fair value.
The Company and the
Predecessor did not recognize any impairment of oil and natural gas properties in the periods presented.
Asset Retirement
Obligations
The Company recognizes
the fair value of an asset retirement obligation ("ARO") in the period in which it is incurred if a reasonable estimate of
fair value can be made. The asset retirement obligation is recorded as a liability at its estimated present value, with an offsetting
increase recognized in oil and natural gas properties on the consolidated balance sheets. Periodic accretion of the discounted value
of the estimated liability is recorded as an expense in the consolidated statements of operations.
Other Property and
Equipment, net
Other property and equipment
are recorded at cost. Other property and equipment are depreciated over its estimated useful life on a straight-line basis. The Company
expenses maintenance and repairs in the period incurred. Upon retirements or dispositions of assets, the cost and related accumulated
depreciation are removed from the consolidated balance sheet with the resulting gains or losses, if any, reflected in operations.
Materials and supplies
are stated at the lower of cost or market and consist of oil and gas drilling or repair items such a tubing, casing, and pumping units.
These items are primarily acquired for use in future drilling or repair operations and are carried at lower of cost or market.
The Company reviews
its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. If such assets are considered impaired, the impairment to be recorded is measured by the amount by which the carrying
amount of the asset exceeds its estimated fair value. The estimated fair value is determined using either a discounted future cash flow
model or another appropriate fair value method.
Derivative Instruments
The Company uses derivative
financial instruments to mitigate its exposure to commodity price risk associated with oil prices. The Company's derivative financial
instruments are recorded on the consolidated balance sheets as either an asset or a liability measured at fair value. The Company has
elected not to apply hedge accounting for its existing derivative financial instruments, and as a result, the Company recognizes the
change in derivative fair value between reporting periods currently in its consolidated statements of operations. The fair value of the
Company's derivative financial instruments is determined using industry-standard models that consider various inputs including:
(i) quoted forward prices for commodities, (ii) time value of money and (iii) current market and contractual prices for
the underlying instruments, as well as other relevant economic measures. Realized gains and losses from the settlement of derivative
financial instruments and unrealized gains and unrealized losses from valuation changes in the remaining unsettled derivative financial
instruments are reported in a single line item as a component of revenues in the consolidated statements of operations. Cash flows from
derivative contract settlements are reflected in operating activities in the accompanying consolidated statements of cash flows. See
Note 4 for additional information about the Company's derivative instruments.
F-
11
The Company's
credit risk related to derivatives is a counterparties' failure to perform under derivative contracts owed to the Company. The
Company uses credit and other financial criteria to evaluate the credit standing of, and to select, counterparties to its derivative
instruments. Although the Company does not obtain collateral or otherwise secure the fair value of its derivative instruments, associated
credit risk is mitigated by the Company's credit risk policies and procedures.
The Company has entered
into International Swap Dealers Association Master Agreements ("ISDA Agreements") with its derivative counterparty. The terms
of the ISDA Agreements provide the Company and the counterparty with rights of set off upon the occurrence of defined acts of default
by either the Company or a counterparty to a derivative, whereby the party not in default may set off all derivative liabilities owed
to the defaulting party against all derivative asset receivables from the defaulting party.
Product Revenues
The Company accounts
for sales in accordance with Accounting Standards Codification ("ASC") 606,
Revenue from Contracts with Customers
.
Revenue is recognized when the Company satisfies a performance obligation in an amount reflecting the consideration to which it expects
to be entitled. The Company applies a five-step approach in determining the amount and timing of revenue to be recognized: (1) identifying
the contract with a customer; (2) identifying the performance obligations in the contract; (3) determining the transaction
price; (4) allocating the transaction price to the performance obligations in the contract; and (5) recognizing revenue when
the performance obligation is satisfied.
The Company enters into
contracts with customers to sell its oil and natural gas production. Revenue from these contracts is recognized when the Company's
performance obligations under these contracts are satisfied, which generally occurs with the transfer of control of the oil and natural
gas to the purchaser. Control is generally considered transferred when the following criteria are met: (i) transfer of physical
custody, (ii) transfer of title, (iii) transfer of risk of loss and (iv) relinquishment of any repurchase rights or other
similar rights. Given the nature of the products sold, revenue is recognized at a point in time based on the amount of consideration
the Company expects to receive in accordance with the price specified in the contract. Consideration under oil and natural gas marketing
contracts is typically received from the purchaser one to two months after production.
Most of the Company's
oil marketing contracts transfer physical custody and title at or near the wellhead or a central delivery point, which is generally when
control of the oil has been transferred to the purchaser. The majority of the oil produced is sold under contracts using market-based
pricing, which price is then adjusted for differentials based upon delivery location and oil quality. To the extent the differentials
are incurred at or after the transfer of control of the oil, the differentials are included in oil revenues on the statements of operations,
as they represent part of the transaction price of the contract. If other related costs are incurred prior to the transfer of control
of the oil, those costs are included in production taxes, transportation and processing expenses on the Company's consolidated
statements of operations, as they represent payment for services performed outside of the contract with the customer.
The Company's
natural gas is sold at the lease location. Most of the Company's natural gas is sold under gas purchase agreements. Under the gas
purchase agreements, the Company receives a percentage of the net production from the sale of the natural gas and residue gas, less associated
expenses incurred by the buyer.
The Company does not
disclose the value of unsatisfied performance obligations under its contracts with customers as it applies the practical expedient in
accordance with ASC 606. The expedient, as described in ASC 606-10-50-14(a), applies to variable consideration that is recognized
as control of the product is transferred to the customer. Since each unit of product represents a separate performance obligation, future
volumes are wholly unsatisfied, and disclosure of the transaction price allocated to remaining performance obligations is not required.
Customers
The Company sold
100
%
of its crude oil and natural gas production to two customers for the years ended December 31, 2023, and 2022. Inherent to the
industry is the concentration of crude oil, natural gas and natural gas liquids ("NGLs") sales to a limited number of customers.
This concentration has the potential to impact the Company's overall exposure to credit risk in that its customers may be similarly
affected by changes in economic and financial conditions, commodity prices or other conditions. Given the liquidity in the market for
the sale of hydrocarbons, the Company believes the loss of any single purchaser, or the aggregate loss of several purchasers, could be
managed by selling to alternative purchasers in the operating areas.
F-
12
Warranty Obligations
The Company provides
an assurance-type warranty that guarantees its products comply with agreed-upon specifications. This warranty is not sold separately
and does not convey any additional goods or services to the customer; therefore, the warranty is not considered a separate performance
obligation. As the Company typically incurs minimal claims under the warranties, no liability is estimated at the time goods are delivered,
but rather at the point of a claim.
Other Revenue
Other revenue is generated
from the fees the Company charges a single customer for the disposal of water, saltwater, brine, brackish water, and other water (collectively,
"Water") into the Company's water injection system. Revenue recognized under the agreement is variable in nature and
primarily based on the volume of Water accepted during the period.
Warrant Liabilities
The Company accounts for warrants as either equity-classified
or liability-classified instruments based on an assessment of the warrant's specific terms and applicable authoritative guidance
in Financial Accounting Standards Board ("FASB") Accounting Standards Codification ASC 480, Distinguishing Liabilities from
Equity ("ASC 480") and ASC 815, Derivatives and Hedging ("ASC 815"). The assessment considers whether the warrants
are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants
meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company's
own common stock, among other conditions for equity classification. This assessment is conducted at the time of warrant issuance and
as of each subsequent quarterly period end date while the warrants are outstanding.
In accordance with Accounting
Standards Codification ASC 815-40, Derivatives and Hedging—Contracts in Entity's Own Equity, the warrants issued in connection
with the Private Notes Payable do not meet the criteria for equity classification due to the redemption right whereby the holder may
require the Company to settle the warrant in cash 18 months after the closing of the MIPA, and must be recorded as liabilities. The warrants
are measured at fair value at inception and at each reporting date in accordance with ASC 820
, Fair Value Measurement
, with changes
in fair value recognized in the statements of operations in the period of change.
Forward Purchase Agreement Valuation
The Company has determined
that the FPA Put Option, including the Maturity Consideration, within the Forward Purchase Agreement is (i) a freestanding financial
instrument and (ii) a liability (i.e., an in-substance written put option). This liability was recorded as a liability at fair value
on the consolidated balance sheet as of the reporting date in accordance with ASC 480. The fair value of the liability was estimated
using a Monte-Carlo Simulation in a risk-neutral framework. Specifically, the future stock price is simulated assuming a Geometric Brownian
Motion ("GBM"). For each simulated path, the forward purchase value is calculated based on the contractual terms and then
discounted back to present. Finally, the value of the forward is calculated as the average present value over all simulated paths. The
model also considered the likelihood of a dilutive offering of common stock.
Concentration of Credit Risk:
Financial instruments that potentially subject the Company to concentrations
of credit risk consist of a cash account in a financial institution, which, at times, may exceed the Federal Depository Insurance Coverage
("FDIC") of $
250,000
. As of December 31, 2023, the Company's cash balance exceeded the FDIC limit by $
342,901
. At December
31, 2023, the Company had not experienced losses on this account and management believes the Company is not exposed to significant risks
on such account.
F-
13
Income Taxes
The Company follows the asset and liability method
of accounting for income taxes under FASB ASC 740, "Income Taxes." Deferred tax assets and liabilities are recognized
for the estimated future tax consequences attributable to differences between the financial statements carrying amounts of existing assets
and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on
deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date.
Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
FASB ASC 740 prescribes a recognition threshold
and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in
a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing
authorities. There were no unrecognized tax benefits as of December 31, 2023 and 2022. The Company recognizes accrued interest and penalties
related to unrecognized tax benefits as income tax expense. No amounts were accrued for the payment of interest and penalties at December
31, 2023 and 2022. The Company is currently not aware of any issues under review that could result in significant payments, accruals,
or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception.
Prior the closing of the Acquisition, the Predecessor
elected to be treated as a partnership for income tax purposes and was not subject to federal, state, or local income taxes. Any taxable
income or loss was recognized by the owners. Accordingly, no federal, state, or local income taxes have been reflected in the accompanying
consolidated financial statements of the Predecessor. Significant differences may exist between the results of operations reported in
these consolidated financial statements and those determined for income tax purposes primarily due to the use of different asset valuation
methods for tax purposes.
Recent Accounting Pronouncements
In August 2020, the Financial Accounting Standards
Board ("FASB") issued Accounting Standards Update ("ASU") 2020-06, Debt-Debt with Conversion and Other Options
(Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity's Own Equity (Subtopic 815-40) ("ASU 2020-06") to
simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial
conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining
to equity classification of contracts in an entity's own equity. The new standard also introduces additional disclosures for convertible
debt and freestanding instruments that are indexed to and settled in an entity's own equity. ASU 2020-06 amends the diluted earnings
per share guidance, including the requirement to use the if-converted method for all convertible instruments. The Company adopted this
guidance early on January 1, 2023 with no impact to the Company's consolidated financial statements.
Management does not believe that any recently
issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company's consolidated
financial statements.
NOTE 3 — BUSINESS
COMBINATION
The Company entered into that certain Amended
and Restated Membership Interest Purchase Agreement, dated as of August 28, 2023 (as amended, the "MIPA"), by and among the
Company, HNRA Upstream, LLC, a newly formed Delaware limited liability company which is managed by, and is a subsidiary of, the Company
("OpCo"), and HNRA Partner, Inc., a newly formed Delaware corporation and wholly owned subsidiary of OpCo ("SPAC Subsidiary",
and together with the Company and OpCo, "Buyer" and each a "Buyer"), CIC Pogo LP, a Delaware limited partnership
("CIC"), DenCo Resources, LLC, a Texas limited liability company ("DenCo"), Pogo Resources Management, LLC, a
Texas limited liability company ("Pogo Management"), 4400 Holdings, LLC, a Texas limited liability company ("4400"
and, together with CIC, DenCo and Pogo Management, collectively, "Seller" and each a "Seller"), and, solely with
respect to Section 6.20 of the MIPA, the Sponsor.
F-
14
On November 15, 2023 (the "Closing Date"),
as contemplated by the MIPA:
●
The
Company filed a Second Amended and Restated Certificate of Incorporation (the "Second A&R Charter") with the Secretary
of State of the State of Delaware, pursuant to which the number of authorized shares of the Company's capital stock, par value
$
0.0001
per share, was increased to
121,000,000
shares, consisting of (i)
100,000,000
shares of Class A common stock, par value $
0.0001
per share (the "Class A Common Stock"), (ii)
20,000,000
shares of Class B common stock, par value $
0.0001
per share (the
"Class B Common Stock"), and (iii)
1,000,000
shares of preferred stock, par value $
0.0001
per share;
●
The
current shares of common stock of the Company were reclassified as Class A Common Stock, the Class B Common Stock have no economic rights
but entitles its holder to one vote on all matters to be voted on by stockholders generally, holders of shares of Class A Common Stock
and shares of Class B Common Stock will vote together as a single class on all matters presented to our stockholders for their vote or
approval, except as otherwise required by applicable law or by the Second A&R Charter;
●
(A)
The Company contributed to OpCo (i) all of its assets (excluding its interests in OpCo and the aggregate amount of cash required to satisfy
any exercise by the Company's stockholders of their Redemption Rights (as defined below)) and (ii)
2,000,000
newly issued shares
of Class B Common Stock (such shares, the "Seller Class B Shares") and (B) in exchange therefor, OpCo issued to the Company
a number of Class A common units of OpCo (the "OpCo Class A Units") equal to the number of total shares of Class A Common
Stock issued and outstanding immediately after the closing (the "Closing") of the transactions (the "Transactions")
contemplated by the Company (following the exercise by the Company's stockholders of their Redemption Rights) (such transactions,
the "SPAC Contribution");
●
Immediately
following the SPAC Contribution, OpCo contributed $
900,000
to SPAC Subsidiary in exchange for
100
% of the outstanding common stock of
SPAC Subsidiary (the "SPAC Subsidiary Contribution"); and
●
Immediately
following the SPAC Subsidiary Contribution, Seller sold, contributed, assigned, and conveyed to (A) OpCo, and OpCo acquired and accepted
from Seller, ninety-nine percent (
99.0
%) of the outstanding membership interests of Pogo Resources, LLC, a Texas limited liability
company ("Pogo" or the "Target"), and (B) SPAC Subsidiary, and SPAC Subsidiary purchased and accepted from Seller,
one percent (
1.0
%) of the outstanding membership interest of Target (together with the ninety-nine (
99.0
%) interest, the "Target
Interests"), in each case, in exchange for (x) $
900,000
of the Cash Consideration (as defined below) in the case of SPAC Subsidiary
and (y) the remainder of the Aggregate Consideration (as defined below) in the case of OpCo (such transactions, together with the SPAC
Contribution and SPAC Subsidiary Contribution, the "Acquisition").
The "Aggregate Consideration" for
the Pogo Business was (a), cash in the amount of $
31,074,127
in immediately available funds (the "Cash Consideration"),
(b)
2,000,000
Class B common units of OpCo ("OpCo Class B Units") (the "Common Unit Consideration"), which will
be equal to and exchangeable into
2,000,000
shares of Class A Common Stock issuable upon exercise of the OpCo Exchange Right (as
defined below), as reflected in the amended and restated limited liability company agreement of OpCo that became effective at Closing
(the "A&R OpCo LLC Agreement"), (c) and the
2,000,000
Seller Class B Shares, (d) $
15,000,000
payable through a promissory
note to Seller (the "Seller Promissory Note"), (e)
1,500,000
preferred units of OpCo (the "OpCo Preferred Units"
and together with the Opco Class A Units and the OpCo Class B Units, the "OpCo Units") of OpCo (the "Preferred Unit
Consideration", and, together with the Common Unit Consideration, the "Unit Consideration"), and (f) an agreement to,
on or before November 21, 2023, Buyer shall settle and pay to Seller $
1,925,873
from sales proceeds received from oil and gas production
attributable to Pogo, including pursuant to its third party contract with affiliates of Chevron. At Closing,
500,000
Seller Class B Shares
(the "Escrowed Share Consideration") were placed in escrow for the benefit of Buyer pursuant to an escrow agreement and the
indemnity provisions in the MIPA. The Aggregate Consideration is subject to adjustment in accordance with the MIPA.
F-
15
OpCo A&R LLC Agreement
In connection with the Closing, the Company and
Pogo Royalty, LLC, a Texas limited liability company, an affiliate of Seller and Seller's designated recipient of the Aggregate
Consideration ("Pogo Royalty"), entered into an amended and restated limited liability company agreement of OpCo (the "OpCo
A&R LLC Agreement"). Pursuant to the A&R OpCo LLC Agreement, each OpCo unitholder (excluding the Company) will, subject
to certain timing procedures and other conditions set forth therein, have the right(the "OpCo Exchange Right") to exchange
all or a portion of its OpCo Class B Units for, at OpCo's election,(i) shares of Class A Common Stock at an exchange ratio of one
share of Class A Common Stock for each OpCo Class B Unit exchanged, subject to conversion rate adjustments for stock splits, stock dividends
and reclassifications and other similar transactions, or (ii) an equivalent amount of cash. Additionally, the holders of OpCo Class B
Units will be required to exchange all of their OpCo Class B Units (a "Mandatory Exchange") upon the occurrence of the following:
(i) upon the direction of the Company with the consent of at least fifty percent (
50
%) of the holders of OpCo Class B Units; or (ii) upon
the one-year anniversary of the Mandatory Conversion Trigger Date. In connection with any exchange of OpCo Class B Units pursuant to the
OpCo Exchange Right or acquisition of OpCo Class B Units pursuant to a Mandatory Exchange, a corresponding number of shares of Class B
Common Stock held by the relevant OpCo unitholder will be cancelled.
Immediately upon the Closing, Pogo Royalty exercised
the OpCo Exchange Right as it relates to
200,000
OpCo Class B units (and
200,000
shares of Class B Common Stock).
The OpCo Preferred Units will be automatically
converted into OpCo Class B Units on the two-year anniversary of the issuance date of such OpCo Preferred Units (the "Mandatory
Conversion Trigger Date") at a rate determined by dividing (i) $
20.00
per unit (the "Stated Conversion Value"),
by (ii) the Market Price of the Class A Common Stock, (the "Conversion Price"). The "Market Price"
means the simple average of the daily VWAP of the Class A Common Stock during the five (5) trading days prior to the date of
conversion. On the Mandatory Conversion Trigger Date, the Company will issue a number of shares of Class B Common Stock to Seller
equivalent to the number of OpCo Class B Units issued to Seller. If not exchanged sooner, such newly issued OpCo Class B
Units shall automatically exchange into Class A Common Stock on the one-year anniversary of the Mandatory Conversion Trigger
Date at a ratio of one OpCo Class B Unit for one share of Class Common Stock. An equivalent number of shares of Class B
Common Stock must be surrendered with the OpCo Class B Units to the Company in exchange for the Class A Common Stock.
As noted above, the OpCo Class B Units must be exchanged upon the one-year anniversary of the Mandatory Conversion Trigger Date.
Option Agreement
In connection with the Closing, HNRA Royalties,
LLC, a newly formed Delaware limited liability company and wholly-owned subsidiary of the Company ("HNRA Royalties") and Pogo
Royalty entered into an Option Agreement (the "Option Agreement"). Pogo Royalty owns certain overriding royalty interests
in certain oil and gas assets owned by Pogo Resources, LLC (the "ORR Interest"). Pursuant to the Option Agreement, Pogo Royalty
granted irrevocable and exclusive option to HNRA Royalties to purchase the ORR Interest for the Option Price (as defined below) at any
time prior to November 15, 2024. The option is not exercisable while the Seller Promissory Note is outstanding.
The purchase price for the ORR Interest upon
exercise of the option is: (i) (1) $
30,000,000
the ("Base Option Price"), plus (2) an additional amount equal
to interest on the Base Option Price of twelve percent (
12
%), compounded monthly, from the Closing Date through the date of acquisition
of the ORR Interest, minus (ii) any amounts received by Pogo Royalty in respect of the ORR Interest from the month of production
in which the effective date of the Option Agreement occurs through the date of the exercise of the option (such aggregate purchase price,
the "Option Price").
The Option Agreement and the option will immediately
terminate upon the earlier of (a) Pogo Royalty's transfer or assignment of all of the ORR Interest in accordance with the
Option Agreement and (b) November 15, 2024. As consideration for the Option Agreement, the Company issued
10,000
shares of Class
A common stock to Pogo Royalty with a fair value of $
67,700
. Pogo Royalty obtained the ORR Interest effective July 1, 2023, when the
Predecessor transferred to Pogo Royalty an assigned and undivided royalty interest equal in amount to ten percent (
10
%) of the Predecessors'
interest all oil, gas and minerals in, under and produced from each lease. The Predecessor recognized a loss on sale of assets of $
816,011
in connection with this transaction.
F-
16
Backstop Agreement
In connection with the Closing, the Company entered
a Backstop Agreement (the "Backstop Agreement") with Pogo Royalty and certain of the Company's founders listed therein
(the "Founders") whereby the Pogo Royalty will have the right ("Put Right") to cause the Founders to purchase
Seller's OpCo Preferred Units at a purchase price per unit equal to $
10.00
per unit plus the product of (i) the number
of days elapsed since the effective date of the Backstop Agreement and (ii) $
10.00
divided by 730. Seller's right to exercise
the Put Right will survive for six (6) months following the date the Trust Shares (as defined below) are not restricted from transfer
under the Letter Agreement (as defined in the MIPA) (the "Lockup Expiration Date").
As security that the Founders will be able to
purchase the OpCo Preferred Units upon exercise of the Put Right, the Founders agreed to place at least
1,300,000
shares of
Class A Common Stock into escrow (the "Trust Shares"), which the Founders can sell or borrow against to meet their obligations
upon exercise of the Put Right, with the prior consent of Seller. The Company is not obligated to purchase the OpCo Preferred Units from
Pogo Royalty under the Backstop Agreement. Until the Backstop Agreement is terminated, Pogo Royalty and its affiliates are not permitted
to engage in any transaction which is designed to sell short the Class A Common Stock or any other publicly traded securities of
the Company.
Founder Pledge Agreement
In connection with the Closing, the Company entered
a Founder Pledge Agreement (the "Founder Pledge Agreement") with the Founders whereby, in consideration of placing the Trust
Shares into escrow and entering into the Backstop Agreement, the Company agreed: (a) by January 15, 2024, to issue to the Founders an
aggregate number of newly issued shares of Class A Common Stock equal to
10
% of the number of Trust Shares; (b) by January 15, 2024, to
issue to the Founders number of warrants to purchase an aggregate number of shares of Class A Common Stock equal to
10
% of the number
of Trust Shares, which such warrants shall be exercisable for five years from issuance at an exercise price of $
11.50
per shares; (c)
if the Backstop Agreement is not terminated prior to the Lockup Expiration Date, to issue an aggregate number of newly issued shares of
Class A Common Stock equal to (i) (A) the number of Trust Shares,
divided by
(B) the simple average of the daily
VWAP of the Class A Common Stock during the five (5) Trading Days prior to the date of the termination of the Backstop Agreement, subject
to a minimum of $
6.50
per share,
multiplied by
(C) a price between $
10.00
-$
13.00
per share (as further described in the
Founder Pledge Agreement),
minus
(ii) the number of Trust Shares; and (d) following the purchase of OpCo Preferred
Units by a Founder pursuant to the Put Right, to issue a number of newly issued shares of Class A Common Stock equal to the number
of Trust Shares sold by such Founder. Until the Founder Pledge Agreement is terminated, the Founders are not permitted to engage
in any transaction which is designed to sell short the Class A Common Stock or any other publicly traded securities of the Company.
The above description of the Founder Pledge Agreement is a summary
only and is qualified in its entirety by the text of the Founder Pledge Agreement. In consideration for entering into the Backstop agreement,
the Company issued the Founders an aggregate of
134,500
shares of Class A Common Stock, with a fair value of $
910,565
based on the closing
price of the Company's common stock of $
6.77
on November 15, 2023.
F-
17
The Acquisition was accounted for as a business
combination under ASC 805.
The purchase price of the Pogo Business has been allocated to the assets acquired and liabilities assumed based
on their estimated relative fair values as follows:
Purchase Price:
Cash
$
31,074,127
Side Letter payable
1,925,873
Promissory note to Sellers of Pogo Business
15,000,000
10,000
EONR Class A Common shares for Option Agreement
67,700
200,000
EONR Class A Common shares
1,354,000
1,800,000
OpCo Class B Units
12,186,000
1,500,000
OpCo Preferred Units
21,220,594
Total purchase consideration
$
82,828,294
Purchase Price Allocation
Cash
$
246,323
Accounts receivable
3,986,559
Prepaid expenses
368,371
Oil & gas reserves
93,809,392
Derivative assets
51,907
Accounts payable
(
2,290,475
)
Accrued liabilities and other
(
1,244,633
)
Revenue and royalties payable
(
775,154
)
Revenue and royalties payable, related parties
(
1,199,420
)
Short-term derivative liabilities
(
27,569
)
Deferred tax liabilities
(
8,528,772
)
Asset retirement obligations, net
(
893,235
)
Other liabilities
(
675,000
)
Net assets acquired
$
82,828,294
The fair value of the Class A common shares is based on
the closing price of the Company's common stock at November 15, 2023, which was $
6.77
. The fair value of the OpCo Class
B Units is based on the equivalent of
1,800,000
shares of Class A common stock and the same closing price. The fair value
of the OpCo Preferred Units was estimated based on the present value of the maximum Stated Conversion Value of
1,500,000
units over the
two-year period using a weighted average cost of capital.
As of December 31, 2023, the Company owes $
645,873
of the Side Letter payable, included in accrued expenses and other current liabilities on the consolidated balance sheet.
Unaudited
Pro Forma Financial Information
The following table sets forth the pro-forma consolidated
results of operations of the combined Successor and Predecessor companies for the year ended December 31, 2023 and 2022 as if the Acquisition
occurred on January 1, 2022.
The pro forma results of operations are presented for informational purposes only and are not indicative
of the results of operations that would have been achieved if the acquisitions had taken place on the dates noted above, or of results
that may occur in the future.
Year ended
December 31,
2023
2022
Revenue
$
25,817,805
$
31,409,762
Operating income
3,471,094
8,809,272
Net income (loss)
(
164,817
)
3,522,642
Net income (loss) per common share
$
(
0.03
)
$
0.67
Weighted Average common shares outstanding
5,235,131
5,220,788
F-
18
NOTE 4 —
DERIVATIVES
Derivative Activities
The Company is exposed
to volatility in market prices and basis differentials for natural gas, oil and NGLs, which impacts the predictability of its cash flows
related to the sale of those commodities. These risks are managed by the Company's use of certain derivative financial instruments.
The company has historically used crude diff swaps, fixed price swaps, and costless collars. As of December 31, 2023, the Company's
derivative financial instruments consisted of costless collars and crude diff swaps, which are described below:
Costless Collars
Arrangements that contain
a fixed floor price ("purchased put option") and a fixed ceiling price ("sold call option") based on an index
price which, in aggregate, have no net cost. At the contract settlement date, (1) if the index price is higher than the ceiling
price, the Company pays the counterparty the difference between the index price and ceiling price, (2) if the index price is between
the floor and ceiling prices, no payments are due from either party, and (3) if the index price is below the floor price, the Company
will receive the difference between the floor price and the index price.
Additionally, the Company
will occasionally purchase an additional call option at a higher strike price than the aforementioned fixed ceiling price. Often this
is accomplished in conjunction with the costless collar at no additional cost. If an additional call option is utilized, at the contract
settlement date, (1) if the index price is higher than the sold call strike price but lower than the purchased option strike price,
then the Company pays the difference between the index price and the sold call strike price, (2) if the index price is higher than
the purchased call price, then the company pays the difference between the purchased call option and the sold call option, and the company
receives payment of the difference between the index price and the purchased option strike price, (3) if the index price is between
the purchased put strike price and the sold call strike price, no payments are due from either party, (4) if the index price is
below the floor price, the Company will receive the difference between the floor price and the index price.
The following table
sets forth the derivative volumes by period as of December 31, 2023 for the Company:
Price collars
Period
Volume
(Bbls/month)
Weighted
average
floor price
($/Bbl)
Weighted
average
ceiling
    price
($/Bbl)
Weighted
average
sold call
($/Bbl)
Q1-Q2 2024
9,000
$
70.00
$
91,90
$
91.90
Q3-Q4 2024
9,000
$
70.00
$
85.50
$
85.50
The following table sets forth the derivative
volumes by period as of December 31, 2022 for the Predecessor:
Price collars
Period
Volume
(Bbls/month)
Weighted
average
floor price
($/Bbl)
Weighted
average
ceiling
    price
($/Bbl)
Weighted
average
sold call
($/Bbl)
Q1-Q2 2023
20,000
$
63.75
$
97.79
$
76.06
Q3-Q4 2023
20,000
$
65.00
$
100.00
$
72.25
F-
19
Crude price differential
swaps
During the year ended
December 31, 2023, the Company has entered into commodity swap contracts that are effective over the next 1 to 24 months and are used
to hedge against location price risk of the respective commodity resulting from supply and demand volatility and protect cash flows against
price fluctuations. The following table reflects the weighted-average price of open commodity swap contracts as of December 31, 2023:
Commodity Swaps
Weighted
Volume
average
Period
(Bbls/month)
price ($/Bbl)
Q1-Q4 2024
3,000
$
71.30
Q1-Q4 2025
3,000
$
67.96
Derivative Assets and Liabilities
As of December 31,
2023 and 2022, the Company is conducting derivative activities with one counterparty, which is secured by the lender in the Company's
bank credit facility. The Company believes the counterparty is acceptable credit risk, and the credit worthiness of the counterparty
is subject to periodic review. The assets and liabilities are netted given that all positions are held by a single counterparty and subject
to a master netting arrangement.
The combined fair value of derivatives included in the accompanying consolidated balance sheets as of
December 31, 2023 and 2022 is summarized below.
As
    of December 31, 2023
(Successor)
Gross fair
value
Amounts
netted
Net fair
value
Commodity derivatives:
Short-term derivative asset
$
583,035
$
(
191,547
)
$
391,488
Long-term derivative asset
76,199
—
76,199
Short-term derivative liability
(
191,547
)
(
191,547
)
—
Long-term derivative liability
—
—
—
Total derivative asset
$
467,687
As
    of December 31, 2022
(Predecessor)
Gross fair
value
Amounts
netted
Net fair
value
Commodity derivatives:
Short-term derivative asset
$
1,596,361
$
1,596,361
$
—
Long-term derivative asset
—
—
—
Short-term derivative liability
(
2,787,715
)
1,596,361
(
1,191,354
)
Long-term derivative liability
—
—
—
Total derivative liability
$
(
1,191,354
)
F-
20
The effects of the Company's derivatives
on the consolidated statements of operations are summarized below:
Successor
Predecessor
November 15,
2023 to
December 31,
2023
January 1,
2023 to
November 14,
2023
For the
year ended
December 31,
2022
Total gain on unsettled derivatives
$
443,349
$
1,215,693
$
2,185,000
Total loss on settled derivatives
(
102,541
)
(
1,163,736
)
(
6,978,790
)
Net gain (loss) on derivatives
$
340,808
$
51,957
$
(
4,793,790
)
NOTE 5 — LONG-TERM DEBT
AND NOTES PAYABLE
The Company's debt instruments are as follows:
December 31,
2023
December 31,
2022
Successor
Predecessor
Senior Secured Term Loan
$
27,680,703
$
-
Predecessor Revolving Credit Facility
-
26,750,000
Seller Promissory Note
15,000,000
-
Private loans
3,469,500
-
Total
46,150,203
26,750,000
Less: discount
(
2,147,346
)
-
Less: current portion including discount
(
6,516,651
)
-
Long-term debt, net of current portion
$
37,486,206
$
26,750,000
Senior Secured Term Loan Agreement
In connection with the Closing, the Company (for
purposes of the Loan Agreement, the "Borrower") and First International Bank& Trust ("FIBT" or "Lender"),
OpCo, SPAC Subsidiary, Pogo, and LH Operating, LLC (for purposes of the Loan Agreement, collectively, the "Guarantors" and
together with the Borrower, the "Loan Parties"), and FIBT entered into a Senior Secured Term Loan Agreement on November 15,
2023 (the "Loan Agreement"), setting forth the terms of a senior secured term loan facility in an aggregate principal amount
of $
28,000,000
(the "Term Loan").
Pursuant to the terms
of the Term Loan Agreement, the Term Loan was advanced in one tranche on the Closing Date. The proceeds of the Term Loan were used to
(a) fund a portion of the purchase price, (b) partially fund a debt service reserve account funded with $
2,600,000
at the Closing
Date, (c) pay fees and expenses in connection with the purchase and the closing of the Term Loan and (e) other general corporate purposes.
The Term Loan accrues interest at a per annum rate equal to the FIBT prime rate plus
6.5
% and fully matures on the third anniversary
of the Closing Date ("Maturity Date"). Payments of principal and interest will be due on the 15
th
day
of each calendar month, beginning December 15, 2023, each in an amount equal to the Monthly Payment Amount (as defined in the Term Loan
Agreement), except that the principal and interest payment due on the Maturity Date will be in the amount of the entire remaining principal
amount of the Term Loan and all accrued but unpaid interest then outstanding. An additional one-time payment of principal is due on the
date the annual financial report for the year ending December 31, 2024, is due to be delivered by Borrower to Lender in an amount
that Excess Cash Flow (as defined in the Term Loan Agreement) exceeds the Debt Service Coverage Ratio (as defined in the Term Loan Agreement)
of 1.35x as of the end of such quarter; provided that in no event shall the amount of the payment exceed $
5,000,000
.
The Borrower may elect
to prepay all or a portion greater than $
1,000,000
of the amounts owed prior to the Maturity Date. In addition to the foregoing, the
Borrower is required to prepay the Term Loan with the net cash proceeds of certain dispositions and upon the decrease in value of collateral.
On the Closing Date,
Borrower deposited $
2,600,000
into a Debt Service Reserve Account (the "Debt Service Reserve Account") and, within 60 days
following the Closing Date, Borrower must deposit such additional amounts such that the balance of the Debt Service Reserve Account is
equal to $
5,000,000
at all times. The Debt Service Reserve Account may be used by Lender at any time and from time to time, in Lender's
sole discretion, to pay (or to supplement Borrower's payments of) the obligations due under the Term Loan Agreement.
The Term Loan Agreement
contains affirmative and restrictive covenants and representations and warranties. The Loan Parties are bound by certain affirmative
covenants setting forth actions that are required during the term of the Term Loan Agreement, including, without limitation, certain
information delivery requirements, obligations to maintain certain insurance, and certain notice requirements. Additionally, the Loan
Parties from time to time will be bound by certain restrictive covenants setting forth actions that are not permitted to be taken during
the term of the Term Loan Agreement without prior written consent, including, without limitation, incurring certain additional indebtedness,
entering into certain hedging contracts, consummating certain mergers, acquisitions or other business combination transactions, consummating
certain dispositions of assets, making certain payments on subordinated debt, making certain investments, entering into certain transactions
with affiliates, and incurring any non-permitted lien or other encumbrance on assets. The Term Loan Agreement also contains other customary
provisions, such as confidentiality obligations and indemnification rights for the benefit of the Lender. The Company was in compliance with covenants of the Term Loan Agreement as of December 31, 2023.
F-
21
Pledge and Security Agreement
In connection with the
Term Loan, FIBT and the Loan Parties entered into a Pledge and Security Agreement on November 15, 2023 (the "Security Agreement"),
whereby the Loan Parties granted a senior security interest to FIBT on all assets of the Loan Parties, except certain excluded assets
described therein, including, among other things, any interests in the ORR Interest.
Guaranty Agreement
In connection with the
Term Loan, FIBT and the Loan Parties entered into a Guaranty Agreement on November 15, 2023 (the "
Guaranty Agreement
"),
whereby the Guarantors guaranteed payment and performance of all Loan Parties under the Term Loan Agreement.
The Company paid deferred
finance costs of $
1,093,318
related to the loan, which are reflect as debt discount. For the period from November 15, 2023 to December
31, 2023, the Company amortized $
56,422
to interest expense. As of December 31, 2023, the principal balance on the Term Loan was $
27,680,7063
,
unamortized discount was $
1,036,895
and accrued interest was $
173,004
.
Subordination Agreement
In connection with the
Term Loan and the Seller Promissory Note, the Lenders, the Sellers and the Company entered into a Subordination Agreement whereby the
Sellers cannot require repayment, nor commence any action or proceeding at law or equity against the Company or the Lenders to recover
any or all of the unpaid Seller Promissory Note until the Term Loan is repaid in full.
Seller Promissory
Note
In connection with the Closing, OpCo issued the
Seller Promissory Note to Pogo Royalty in the principal amount of $
15,000,000
. The Seller Promissory Note matures on May 15, 2024, bears
an interest rate equal
12
% per annum, and contains no penalty for prepayment. If the Seller Promissory Note is not repaid in full on
or prior to its stated maturity date, OpCo will owe interest from and after default equal to the lesser of
18
% per annum and the highest
amount permissible under law, compounded monthly. The Seller Promissory Note is subordinated to the Term Loan as discussed above. Accrued
interest on the Seller Promissory Note was $
277,397
as of December 31, 2023. As a result of the Subordination Agreement, the Company
has classified the Seller Promissory Note as a long-term liability on the consolidated balance sheet.
Private Notes Payable
Prior to December 31, 2023 the Company entered
into various unsecured promissory notes with existing investors of the Company for total principal of $
5,434,000
(the "Private
Notes Payable"). The Private Notes Payable bear interest at the greater of
15
% or the highest rate allowed under law, and have
a stated maturity date of the five-year anniversary of the closing of the MIPA. The investors may demand repayment beginning six months
after the closing of the MIPA. The investors also received common stock warrants equal to the principal amount funded. Each warrant entitles
the holder to purchase three quarters of one share of common stock at a price of $
11.50
. Each warrant will become exercisable on the
closing date of the MIPA and is exercisable through the five-year anniversary of the promissory note agreement date. The warrants also
grant the holder a one-time redemption right to require the Company pay the holder in cash equal to $
1
per warrant 18 months following
the closing of the MIPA, or May 15, 2025. A total of
5,434,000
warrants were issued to these investors. Based on the redemption right
present in these warrants, the warrants are accounted for as a liability in accordance with ASC 480 and ASC 815 and a debt discount on
the Private Notes Payable, with the changes in fair value of the warrants recognize in the statement of operations.
F-
22
On November 13, 2023, the Company entered into
exchange agreements ("Exchange Agreements") with certain holders of Private Notes Payable, The Company issued
451,563
shares
of Class A common stock to certain holders of the Private Notes Payable to settle aggregate principal of $
2,089,500
and aggregate accrued
interest of $
168,271
, and recognized a loss on extinguishment of $
2,280,437
based on the
fair value of the shares of common stock issued at the date of the Exchange Agreements.
The Company is amortizing the debt discount through
a period of six months from the Closing Date. The Company recognized amortization of debt discount of $
1,135,131
during the period from
November 15, 2023 to December 31, 2023. Accrued interest on the promissory notes was $
158,801
as of December 31, 2023.
Predecessor Revolving Credit Facility
On June 25, 2019, the Predecessor entered into
a credit agreement (the "Credit Agreement") with a banking institution for a revolving credit facility (the "Predecessor
Revolver") that provided for a maximum facility amount of $
50,000,000
and a letter of credit sublimit not to exceed ten percent
of the available borrowing base. As of December 31, 2022, the Company had $
26,750,000
of outstanding borrowings under the Revolver and
$
702,600
of letters of credit outstanding As of November 14, 2023, the balance of the Predecessor Revolver was $
23,750,000
. The Predecessor
Revolver was not assumed by the Company in the MIPA, and was settled by the Sellers from its proceeds from the sale of Pogo to the Company.
Future Maturities of Long-term debt
The following summarizes the Company's
maturities of debt instruments:
Principal
Fiscal year ended:
December 31, 2024
$
7,627,102
December 31, 2025
10,558,077
December 31, 2026
27,965,024
December 31, 2027
—
Total
$
46,150,203
NOTE 6 —
FORWARD PURCHASE AGREMENT
Forward Purchase
Agreement
On November 2, 2023,
the Company entered into an agreement with (i) Meteora Capital Partners, LP ("MCP"), (ii) Meteora Select Trading Opportunities
Master, LP ("MSTO"), and (iii) Meteora Strategic Capital, LLC ("MSC" and, collectively with MCP and MSTO, "FPA
Seller") (the "Forward Purchase Agreement") for OTC Equity Prepaid Forward Transactions. For purposes of the Forward
Purchase Agreement, the Company is referred to as the "Counterparty". Capitalized terms used herein but not otherwise defined
shall have the meanings ascribed to such terms in the Forward Purchase Agreement.
The Forward Purchase
Agreement provides for a prepayment shortfall in an amount in U.S. dollars equal to
0.50
% of the product of the Recycled Shares and the
Initial Price (defined below). FPA Seller in its sole discretion may sell Recycled Shares (i) at any time following November 2, 2023
(the "Trade Date") at prices greater than the Reset Price or (ii) commencing on the 180th day following the Trade Date at
any sales price, in either case without payment by FPA Seller of any Early Termination Obligation until such time as the proceeds from
such sales equal
100
% of the Prepayment Shortfall (as set forth under the section entitled "Shortfall Sales" in the Forward
Purchase Agreement) (such sales, "Shortfall Sales," and such Shares, "Shortfall Sale Shares"). A sale of Shares
is only (a) a "Shortfall Sale," subject to the terms and conditions herein applicable to Shortfall Sale Shares, when a Shortfall
Sale Notice is delivered under the Forward Purchase Agreement, and (b) an Optional Early Termination, subject to the terms and conditions
of the Forward Purchase Agreement applicable to Terminated Shares, when an OET Notice is delivered under the Forward Purchase Agreement,
in each case the delivery of such notice in the sole discretion of the FPA Seller (as further described in the "Optional Early
Termination" and "Shortfall Sales" sections in the Forward Purchase Agreement).
F-
23
Following the Closing,
the reset price (the "Reset Price") will be $
10.00
; provided that the Reset Price shall be reduced pursuant to a Dilutive
Offering Reset immediately upon the occurrence of such Dilutive Offering. The Purchased Amount subject to the Forward Purchase Agreement
shall be increased upon the occurrence of a Dilutive Offering Reset to that number of Shares equal to the quotient of (i) the Purchased
Amount divided by (ii) the quotient of (a) the price of such Dilutive Offering divided by (b) $
10.00
.
From time to time and
on any date following the Trade Date (any such date, an "OET Date") and subject to the terms and conditions in the Forward
Purchase Agreement, FPA Seller may, in its absolute discretion, terminate the Transaction in whole or in part by providing written notice
to Counterparty (the "OET Notice"), by the later of (a) the fifth Local Business Day following the OET Date and (b) no later
than the next Payment Date following the OET Date, (which shall specify the quantity by which the Number of Shares shall be reduced (such
quantity, the "Terminated Shares")). The effect of an OET Notice shall be to reduce the Number of Shares by the number of
Terminated Shares specified in such OET Notice with effect as of the related OET Date. As of each OET Date, Counterparty shall be entitled
to an amount from FPA Seller, and the FPA Seller shall pay to Counterparty an amount, equal to the product of (x) the number of Terminated
Shares and (y) the Reset Price in respect of such OET Date. The payment date may be changed within a quarter at the mutual agreement
of the parties.
The "Valuation
Date" will be the earlier to occur of (a) the date that is three (3) years after the date of the closing of the Purchase &
Sale (the date of the closing of the Purchase & Sale, the "Closing Date") pursuant to the A&R MIPA, (b) the date
specified by FPA Seller in a written notice to be delivered to Counterparty at FPA Seller's discretion (which Valuation Date shall
not be earlier than the day such notice is effective) after the occurrence of any of (w) a VWAP Trigger Event, (x) a Delisting Event,
(y) a Registration Failure or (z) unless otherwise specified therein, upon any Additional Termination Event, and (c) the date specified
by FPA Seller in a written notice to be delivered to Counterparty at FPA Seller's sole discretion (which Valuation Date shall not
be earlier than the day such notice is effective). The Valuation Date notice will become effective immediately upon its delivery from
FPA Seller to Counterparty in accordance with the Forward Share Purchase Agreement.
On the "Cash Settlement
Payment Date," which is the tenth Local Business Day immediately following the last day of the Valuation Period, the FPA Seller
will remit to the Counterparty an amount equal to the Settlement Amount and will not otherwise be required to return to the Counterparty
any of the Prepayment Amount and the Counterparty shall remit to the FPA Seller the Settlement Amount Adjustment; provided, that if the
Settlement Amount less the Settlement Amount Adjustment is a negative number and either clause (x) of Settlement Amount Adjustment applies
or the Counterparty has elected pursuant to clause (y) of Settlement Amount Adjustment to pay the Settlement Amount Adjustment in cash,
then neither the FPA Seller nor the Counterparty shall be liable to the other party for any payment under the Cash Settlement Payment
Date section of the Forward Purchase Agreement.
The FPA Seller has agreed
to waive any redemption rights with respect to any Recycled Shares in connection with the Closing, as well as any redemption rights under
the Company's certificate of incorporation that would require redemption by the Company.
Pursuant to the Forward Purchase Agreement, the
FPA Seller obtained
50,070
shares ("Recycled Shares") and such purchase price of $
545,356
, or $
10.95
per share, was
funded by the use of the Company's trust account proceeds as a partial prepayment ("Prepayment Amount"), and the FPA
Seller may purchase an additional
504,425
additional shares under the Forward Purchase Agreement, for the Forward Purchase Agreement redemption 3 years
from the date of the Acquisition ("Maturity Date").
The FPA Seller received
an additional $
1,004,736
in cash from the Trust Account related to reimbursement for
90,000
shares of Class A Common stock purchased by
the FPA Seller in connection with the transactions at the redemption price of $
10.95
per share and transaction fees.
The Maturity Date may
be accelerated, at the FPA Sellers' discretion, if the Company share price trades below $
3.00
per share for any 10 trading
days during a 30-day consecutive trading-day period or the Company is delisted. The Company's common stock traded below minimum
trading price during the period from November 15, 2023 to December 31, 2023, but no acceleration of the Maturity Date has been executed
by the FPA Seller to date.
F-
24
The fair value of the
prepayment was $
14,257,648
at inception of the agreement, $
6,066,324
as of the Closing date and was $
6,067,094
as of December 31, 2023,
and is included as a reduction of additional paid-in capital on the consolidated statement of stockholders' equity. The estimated
fair value of the Maturity Consideration is $
1,704,416
. The Company recognized a gain from the change in fair value of the Forward Purchase
Agreement of $
3,268,581
during the period from November 15, 2023 to December 31, 2023.
NOTE 7 — STOCKHOLDERS'
EQUITY
On November 15, 2023, as contemplated by the MIPA,
the Company filed the Second A&R Charter with the Secretary of State of the State of Delaware, pursuant to which the number of authorized
shares of the Company's capital stock, par value $
0.0001
per share, was increased to
121,000,000
shares, consisting of (i)
100,000,000
shares of Class A common stock, par value $
0.0001
per share (the "Class A Common Stock"), (ii)
20,000,000
shares of Class
B common stock, par value $
0.0001
per share (the "Class B Common Stock"), and (iii)
1,000,000
shares of preferred stock, par
value $
0.0001
per share.
As part of the Closing on November 15, 2023, all
previously issued and outstanding shares of the Company's common stock were converted into Class A common shares. Prior to the Closing,
there were
3,006,250
shares of non-redeemable common stock and
4,509,403
shares of redeemable common stock outstanding. In connection
with the Business Combination, holders of
3,323,707
shares of common stock properly exercised their right to have their public shares
redeemed for a pro rata portion of the Trust Account. The holders received $
36,383,179
of cash proceeds from the Trust Account.
As part of the consideration
to effect the Acquisition, the Company issued
2,000,000
Class B common shares to the Sellers. Immediately upon the Closing, Pogo Royalty
exercised the OpCo Exchange Right as it relates to
200,000
OpCo Class B units (and
200,000
shares of Class B Common Stock), and received
200,000
shares of Class A common stock.
In consideration for entering into the Backstop agreement, the Company
issues the Founders an aggregate of
134,500
shares of Class A Common Stock, with a fair value of $
910,565
based on the closing price of
the Company's Class A Common Stock on November 15, 2023 of $
6.77
per share. Also, in connection with the Closing, the Company issued
20,000
shares of common stock with a fair value of $
135,400
to two consultants for due diligence costs. The stock based compensation expense
related to these issuances is included in general and administrative expenses on the Successor consolidated statement of operations. The
Company also issued
89,000
shares of common stock to a company controlled by the Company's CEO in satisfaction of $
900,000
of the
finder's fee. See Note 9.
As of December 31, 2023, there were
5,235,131
Class A common shares and
1,800,000
Class B common shares outstanding.
Non-Redemption Agreement
On November 13, 2023, the Company entered into
an agreement with (i) Meteora Capital Partners, LP ("MCP"), (ii) Meteora Select Trading Opportunities Master, LP ("MSTO"),
and (iii) Meteora Strategic Capital, LLC ("MSC" and, collectively with MCP and MSTO, "Backstop Investor") (the
"Non-Redemption Agreement") pursuant to which Backstop Investor agreed to reverse the redemption of
600,000
shares of common
stock, par value $
0.0001
per share, of the Company ("Common Stock"). Immediately upon consummation of the closing of the transactions
contemplated by the MIPA (the "Closing"), the Company paid the Backstop Investor, in respect of the Backstop Investor Shares,
an amount in cash equal to (x) the Backstop Investor Shares, multiplied by (y) the Redemption Price (as defined in the Company's
amended and restated certificate of incorporation) minus $
5.00
, or $
3,567,960
. The Company paid the BackStop Investor a total of $
6,017,960
in cash related to the Non-Redemption Agreement from proceeds of the Trust Account
Common Stock Purchase Agreement
On October 17, 2022, the Company entered into
a common stock purchase agreement (as amended, the "Common Stock Purchase Agreement") and a related registration rights agreement
(the "White Lion RRA") with White Lion Capital, LLC, a Nevada limited liability company ("White Lion"). On March
7, 2024, we entered into an Amendment No. 1 to the Common Stock Purchase Agreement.
Pursuant to the Common Stock Purchase Agreement, the
Company has the right, but not the obligation to require White Lion to purchase, from time to time, up to $
150,000,000
in aggregate gross
purchase price of newly issued shares of the Company's common stock, par value $
0.0001
per share, subject to certain limitations
and conditions set forth in the Common Stock Purchase Agreement. Capitalized terms used but not otherwise defined herein shall have the
meaning given to such terms by the Common Stock Purchase Agreement.
F-
25
Subject to the satisfaction of certain customary
conditions including, without limitation, the effectiveness of a registration statement registering the shares issuable pursuant to the
Common Stock Purchase Agreement, the Company's right to sell shares to White Lion will commence on the effective date of the registration
statement and extend until December 31, 2026. During such term, subject to the terms and conditions of the Common Stock Purchase Agreement,
the Company may notify White Lion when the Company exercises its right to sell shares (the effective date of such notice, a "Notice
Date"). The number of shares sold pursuant to any such notice may not exceed (i) the lower of (a) $
2,000,000
and (b) the dollar
amount equal to the product of (1) the Effective Daily Trading Volume (2) the closing price of common stock on the Effective Date (3)
400
% and (4)
30
%, divided by the closing price of common stock on NYSE American preceding the Notice Date and (ii) a number of shares
of common stock equal to the Average Daily Trading Volume multiplied by the Percentage Limit.
The purchase price to be paid by White Lion for
any such shares will equal
96
% of the lowest daily volume-weighted average price of common stock during a period of two consecutive trading
days following the applicable Notice Date.
The Company will have the right to terminate
the Common Stock Purchase Agreement at any time after Commencement, at no cost or penalty, upon three trading days' prior written
notice. Additionally, White Lion will have the right to terminate the Common Stock Purchase Agreement upon three days' prior written
notice to the Company if (i) there is a Fundamental Transaction, (ii) the Company is in breach or default in any material respect of
the White Lion RRA, (iii) there is a lapse of the effectiveness, or unavailability of, the Registration Statement for a period of 45
consecutive trading days or for more than an aggregate of 90 trading days in any 365-day period, (iv) the suspension of trading of the
common stock for a period of five consecutive trading days, (v) the material breach of the Common Stock Purchase Agreement by the Company,
which breach is not cured within the applicable cure period or (vi) a Material Adverse Effect has occurred and is continuing. No termination
of the Common Stock Purchase Agreement will affect the registration rights provisions contained in the White Lion RRA.
In consideration for the commitments of White Lion, as described above,
the Company issued 138,122 shares of Class A common stock to White Lion in satisfaction of a $
1,500,000
commitment fee pursuant to the
terms of the Common stock Purchase Agreement at a price of $
10.86
per share, which is include in general and administrative expenses on
the consolidated statement of operations of the Successor.
Registration Rights Agreement (White Lion)
Concurrently with the execution of the Common
Stock Purchase Agreement, the Company entered into the White Lion RRA with the White Lion in which the Company has agreed to register
the shares of common stock purchased by White Lion with the SEC for resale within 30 days of the consummation of a business combination.
The White Lion RRA also contains usual and customary damages provisions for failure to file and failure to have the registration statement
declared effective by the SEC within the time periods specified.
The Common Stock Purchase Agreement and the White
Lion RRA contain customary representations, warranties, conditions and indemnification obligations of the parties. The representations,
warranties and covenants contained in such agreements were made only for purposes of such agreements and as of specific dates, were solely
for the benefit of the parties to such agreements and may be subject to limitations agreed upon by the contracting parties.
NOTE 8 — FAIR VALUE OF FINANCIAL INSTRUMENTS:
The fair value of the Company's assets
and liabilities, which qualify as financial instruments under FASB ASC 820, "Fair Value Measurement", approximates the
carrying amounts represented on the balance sheet.
F-
26
The Fair value is defined
as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market
participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring
fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities
(Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
●
Level 1, defined as observable
    inputs such as quoted prices (unadjusted) for identical instruments in active markets;
●
Level 2, defined as inputs
    other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments
    in active markets or quoted prices for identical or similar instruments in markets that are not active; and
●
Level 3, defined as unobservable
    inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations
    derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
In some circumstances,
the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances, the
fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant
to the fair value measurement.
Recurring Basis
Assets and liabilities
measured at fair value on a recurring basis are as follows:
Derivatives
The Company's
commodity price derivatives primarily represent crude oil collar contracts (some with long calls), fixed price swap contracts and differential
swap contracts. The asset and liability measurements for the Company's commodity price derivative contracts are determined using
Level 2 inputs. The asset and liability values attributable to the Company's commodity price derivatives were determined based
on inputs that include, but not limited to, the contractual price of the underlying position, current market prices, crude oil forward
curves, discount rates, and volatility factors. The Company had a net derivative asset of $
467,687
as of December 31, 2023 and the Predecessor
had a net derivative liability of $
1,191,354
as of December 31, 2022.
Forward Purchase Agreement
The fair value upon issuance of the Forward Purchase
Agreement (both the FPA Put Option liability and Fixed Maturity Consideration) and the change in fair value from issuance to December 31,
2023 is included in other expense, net in the consolidated statements of operations and comprehensive loss. The fair value of the FPA
was estimated using a Monte-Carlo Simulation in a risk-neutral framework. Specifically, the future stock price is simulated assuming
a Geometric Brownian Motion ("GBM"). For each simulated path, the forward purchase value is calculated based on the contractual
terms and then discounted back to present. Finally, the value of the forward is calculated as the average present value over all simulated
paths. The Maturity Consideration was also valued as part of this model as the timing of the payment of the Maturity Consideration may
be accelerated if the Maturity Date is accelerated. The model also considered the likelihood of a dilutive offering of common stock.
The following table represents the weighted average
inputs used in calculating the fair value of the prepaid forward contract and the Maturity Consideration as of December 31, 2023:
December 31,
2023
Successor
Stock price
$
2.03
Term (in years)
2.11
Expected volatility
40.7
%
Risk-free interest rate
3.96
%
Expected dividend yield
—
%
The Company estimated
the likelihood of a Dilutive Offering at a price of $
5.00
per share to be
50
% within nine months of December 31, 2023. The FPA estimated
fair value is considered a level 3 fair value measurement.
F-
27
Warrant Liability
Based on the redemption right present in the
warrants issued in connection with promissory notes, the warrants are accounted for as a liability in accordance with ASC 480 and ASC
815, with the changes in fair value of the warrants recognize in the statement of operations.
The Company valued the warrants using the trading
prices of the Public Warrants, which mirror the terms of the note payable warrants. The Company also estimated the fair value of the
redemption put using a present value calculation for the time from the Closing Date of the MIPA through the 18-month redemption date
and an estimated discount rate of
15
%. The initial fair value of the warrant liabilities for warrants issued during the period was $
4,506,312
and was recognized as debt discount. The estimated fair value of the warrants and redemption put was $
4,777,970
as of December 31, 2023,
and the Company recognized a change in fair value of the warrant liability of a gain of $
187,704
during the period from November 15,
2023 to December 31, 2023. The warrant liability estimated fair value is considered a level 3 fair value measurement.
Nonrecurring Basis
The carrying value of
the Company's financial instruments, consisting of cash, accounts receivable, accounts payable and accrued expenses, approximates
their fair value due to the short maturity of such instruments. Financial instruments also consist of debt for which fair value approximates
carrying values as the debt bears interest at fixed or variable rates which are reflective of current rates otherwise available to the
Company. The Company is not exposed to significant interest, currency or credit risks arising from these financial instruments.
NOTE 9 — RELATED PARTY TRANSACTIONS
On May 5, 2022, the Company entered into a Referral Fee and Consulting
Agreement (the "Consulting Agreement") with Alexandria VMA Capital, LLC ("Alexandria"), an entity controlled by
Mr. Caravaggio, who became the Company's CEO on December 17, 2023. Pursuant to the Consulting Agreement, Alexandria provided information
and contacts with suitable investments and acquisition candidates for the Company's initial business combination. In addition, Alexandria
provided due diligence, purchasing and negotiating strategy advice, organizational and operational advice, and such other services as
requested by the Company. In consideration of the services provided by Alexandria, the Company paid to Alexander Capital a referral fee
of $
1,800,000
equal to
2
% of the total value of the Company's business combination, with half being paid by the issuance of
89,000
shares of the Company's Class A Common Stock. No gain was recognized on the issuance of these shares for the difference in the fair
value of the shares and the $
900,000
payable due to the related party nature of the transaction. The remaining $
900,000
was reflected
as accounts payable. As of December 31, 2023, the Company owes $
762,000
of the fee.
On January 20, 2023, January 27, 2023, and February
14, 2023, Mr. Caravaggio entered into Private Notes Payable with the Company. Pursuant to the Private Notes Payable, Mr. Caravaggio paid
an aggregate amount of $
179,000
and received promissory notes in the aggregate principal amount of $
179,000
, accruing interest at a rate
of
15
% per annum, and common stock warrants to purchase an aggregate of
179,000
shares of Class A Common Stock of the Company at an exercise
price of $
11.50
per share. The warrants issued to Mr. Caravaggio are identical to the Public Warrants that are publicly traded on the
NYSE American under the symbol "HNRAQ" in all material respects, except that the warrants were not transferable, assignable
or salable until 30 days after the Company's initial business combination. The warrants are exercisable on the same basis as the
Public Warrants.
On November 13, 2023, pursuant to an Exchange Agreement, the Company
agreed with Dante Caravaggio to exchange, in consideration of the surrender and forgiveness of an aggregate amount (including principal
and interest accrued thereon) of $
100,198
due under the Private Notes Payable, for
20,040
shares of Class A Common Stock at a price per
share equal to $
5.00
per share. The Company recognized a loss extinguishment of $
101,204
in connection with this transaction.
Pursuant to the Founder Pledge Agreement, upon the Closing, the Company
issued
30,000
shares of Class A Common Stock to Dante Caravaggio, LLC, an entity controlled by Mr. Caravaggio with a fair value of $
203,100
.
F-
28
On February 14, 2023, the Company entered into
a consulting agreement with Donald Orr, the Company's former President, which became effective upon the closing of the MIPA for
a term of three years. Under the agreement, the Company will pay Mr. Orr an initial cash amount of $
25,000
, an initial award of
60,000
shares of common stock, a monthly payment of $
8,000
for the first year of the agreement and $
12,000
per month for the remaining two years,
and two grants, each consisting of restricted stock units ("RSUs") calculated by dividing $
150,000
by the stock price on the
one year and two year anniversary of the initial Business Combination. Each of the RSU awards will vest upon the one year and two-year
anniversary of the grants. In the event of termination of Mr. Orr without cause, Mr. Orr will be entitled to 12 months of the monthly
payment in effect at that time, and the RSU awards issued to Mr. Orr shall fully vest. The
60,000
RSU's were approved by the Board
and issued in March of 2024.
On February 15, 2023, the Company entered into
a consulting agreement with Rhône Merchant House, Ltd. ("RMH Ltd"), a company control by the Company's former
Chairman and CEO Donald H. Goree, which became effective upon the closing of the MIPA for a term of three years. Under the agreement,
the Company will pay to RMH Ltd an initial cash amount of $
50,000
, an initial award of
60,000
shares of common stock, a monthly payment
of $
22,000
, and two grants, each consisting of RSUs calculated by dividing $
250,000
by the stock price on the one year and two-year anniversary
of the initial Business Combination. Each of the RSU awards will vest upon the one year and two-year anniversary of the grants. In the
event of termination of RMH Ltd. without cause, RMH Ltd. will be entitled to $
264,000
, and the RSU awards issued to RMH Ltd. shall fully
vest. The
30,000
RSU's were approved by the Board of Directors and issued in March of 2024. Effective May 6, 2024, the Company and
Rhône Merchant House, Ltd. entered into a settlement and mutual release agreement pursuant to which the Company agreed to pay $
100,000
in cash, with $
50,000
paid on or before execution and the remaining $
50,000
by July 24, 2024 in the form of an unsecured promissory note.
The Company also agreed to issue
150,000
shares of Class A Common Stock subject to a contractual lockup as final consideration under the
Consulting Agreement, which was deemed terminated effective May 6, 2024.
Predecessor
In December of 2022,
the Predecessor entered into a related party promissory note receivable agreement with an entity controlled by owners of the Company
in an amount of $
4,000,000
. The loan bore interest at a rate equal to that of the rate that the Company pays to borrow funds for its
own account plus
0.5
%. The loan was retired at the Closing Date by the Sellers.
NOTE 10 — COMMITMENTS AND
CONTINGENCIES
Registration Rights Agreement (Founder Shares)
The holders of the Founder Shares and the Private
Placement Units and warrants that may be issued upon conversion of Private Notes Payable (and any shares of common stock issuable
upon the exercise of the Private Placement Units or warrants issued upon conversion of the working capital loans) will be entitled
to registration rights pursuant to a registration rights agreement to be signed on or before the date of the prospectus for the Initial
Public Offering. The holders of these securities are entitled to make up to three demands in the case of the founder shares, excluding
short form registration demands, and one demand in the case of the private placement warrants, the working capital loan warrants and,
in each case, the underlying shares that the Company register such securities for sale under the Securities Act. In addition, these holders
will have "piggy-back" registration rights to include their securities in other registration statements filed by the Company.
In the case of the private placement warrants, representative shares issued to EF Hutton, the demand registration rights provided will
not be exercisable for longer than five years from the effective date of the registration statement in compliance with FINRA Rule 5110(f)(2)(G)(iv) and
the piggyback registration right provided will not be exercisable for longer than seven years from the effective date of the registration
statement in compliance with FINRA Rule 5110(f)(2)(G)(v). The Company will bear the expenses incurred in connection with the filing
of any such registration statements.
Contingencies
The Company is a party to various legal actions
arising in the ordinary course of its businesses. In accordance with ASC 450, Contingencies, the Company accrues reserves for outstanding
lawsuits, claims and proceedings when a loss contingency is probable and can be reasonably estimated. The Company estimates the amount
of loss contingencies using current available information from legal proceedings, advice from legal counsel and available insurance coverage.
Due to the inherent subjectivity of the assessments and unpredictability of the outcomes of the legal proceedings, any amounts accrued
or included in this aggregate amount may not represent the ultimate loss to the Company from the legal proceedings in question. Thus,
the Company's exposure and ultimate losses may be higher, and possibly significantly more, than the amounts accrued.
F-
29
Environmental
From time to time, and in the ordinary course
of business, the Company may be subject to certain environmental liabilities. Environmental expenditures that relate to an existing condition
caused by past operations and have no future economic benefits are expensed. Environmental expenditures that extend the life of the related
property or mitigate or prevent future environmental contamination are capitalized. Liabilities for expenditures that will not qualify
for capitalization are recorded when environmental assessment and/or remediation is probable, and the costs can be reasonably estimated.
Such liabilities are undiscounted unless the timing of cash payments for the liability is fixed or reliably determinable. Environmental
liabilities normally involve estimates that are subject to revision until settlement or remediation occurs.
As of December 31, 2023 (Successor) and December
31, 2022 (Predecessor), the Company and the Predecessor recorded an environmental remediation liability of $
675,000
relating to an oil
spill at one of the Company's producing sites in fiscal year 2017 which is recorded in other liabilities in the consolidated balance
sheets. The producing site was subsequently sold in 2019 and the Predecessor indemnified the purchaser for the remediation costs. Management
based the remediation liability on the undiscounted cost received from third- party quotes to remediate the spill. As of December 31,
2023, the Company does not believe it is likely remediation will be required in the next five years.
NOTE 11 — INCOME TAXES
Predecessor
Prior the closing of the Acquisition, the Predecessor
elected to be treated as a partnership for income tax purposes and was not subject to federal, state, or local income taxes. Any taxable
income or loss was recognized by the owners. Accordingly, no federal, state, or local income taxes have been reflected in the accompanying
consolidated financial statements of the Predecessor.
Successor
As of December 31, 2023, the Company's net
deferred tax assets were as follows:
December 31,
2023
Deferred tax assets
Federal net operating loss
$
454,225
Transaction costs
1,441,904
Other debt costs
885,890
Stock-based compensation
268,405
Other
3,611
Total deferred tax assets
3,054,035
Deferred tax liabilities
Oil and natural gas properties
(
9,097,162
)
Unrealized gain on derivatives
(
120,013
)
Total deferred tax assets
(
9,217,175
)
Net deferred tax liabilities
(
6,163,140
)
Valuation allowance for deferred tax assets
-
Net Deferred tax liability, net of allowance
$
(
6,163,140
)
F-
30
The income tax provision consists of the following:
For the
period from
November 15,
2023 to
December 31,
2023
Current income tax (benefit) expense
Federal
$
(
22,007
)
State
-
Total current income tax benefit
(
22,007
)
Deferred tax (benefit) expense:
Federal
(1,467,62
)
State
(
325,795
)
Valuation allowance
(
571,975
)
Total deferred income tax (benefit) expense
(
2,365,632
)
Total income tax (benefit) expense
$
(
2,387,639
)
As of December 31,
2023, the Company
had $
1,770,098
of estimated U.S. federal net operating loss carryovers, which do not expire, and no state net operating loss carryovers
available to offset future taxable income.
In assessing the realization of the deferred
tax assets, management considers whether it is more likely than not that some portion of all of the deferred tax assets will not be realized.
The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which
temporary differences representing net future deductible amounts become deductible. Management considers the scheduled reversal of deferred
tax liabilities, projected future taxable income and tax planning strategies in making this assessment. After consideration of all of
the information available, management believes that significant uncertainty exists with respect to future realization of the deferred
tax assets and has therefore established a full valuation allowance.
Under the Tax Cuts and Jobs Act, net operating
losses incurred after December 31, 2017 can only offset
80
% of taxable income. However, these net operating losses may be carried forward
indefinitely instead of limited to twenty years under previous tax law. Carryback of these losses is no longer permitted. The CARES Act
temporarily removed the
80
% of taxable income limitation to allow NOL carryforwards to fully offset income. For tax years beginning after
2021, the Company can take: (1) a
100
% deduction of NOLs arising in tax years prior to 2018, and (2) a deduction limited to
80
% of modified
taxable income for NOLs arising in tax years after 2017.
A reconciliation of the federal income tax rate to the Company's
effective tax rate is as follows:
For the
period from
November 15,
2023 to
December 31,
2023
Statutory federal income tax rate
21.00
%
State Taxes (Net of Federal Benefit)
2.86
%
Permanent Differences
(
8.11
)%
Change in valuation allowance
5.02
%
Other
0.19
%
Income tax provision
20.97
%
The effective income tax rate differs from the
U.S. statutory rate of
21
percent primarily due to permanent differences between GAAP income and taxable income. Periods prior to November
15, 2023 are not shown because the Predecessors were treated as partnerships for U.S. federal income tax purposes and therefore do not
record a provision for U.S. federal income tax because the partners of the Predecessors report their share of the Predecessors'
income or loss on their respective income tax returns. The Predecessors are required to file tax returns on Form 1065 with the IRS. The
2021 through 2023 tax years remain open to examination.
F-
31
The Company files income tax returns in the U.S.
federal jurisdiction, Texas and New Mexico, and is subject to examination by the various taxing authorities. The Company's tax
returns since inception remain open to examination by the taxing authorities. Significant differences may exist between the results of
operations reported in these consolidated financial statements and those determined for income tax purposes primarily due to the use
of different asset valuation methods for tax purposes.
NOTE 12 — SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions
that occurred after the balance sheet date up to the date that the consolidated financial statements were issued.
Subsequent to December 31, 2023, the Company received an additional
$
350,000
in cash proceeds under unsecured promissory notes with investors with the same terms as those disclosed in Note 5. The Company
issued an additional
350,000
warrants with an exercise price of $
11.50
to these investors in connection with the agreements.
On March 4, 2024, the Compensation Committee of the Board of Directors
approved awards of restricted stock units ("RSU's") to various employees, non-employee directors and consultants. Non-employee
directors received an aggregate of
224,500
RSU's, with
112,000
RSU's vesting over
3
years beginning November 15, 2024, and
112,500
RSU's fully vesting at November 15, 2024. Employees received a total of
285,000
RSU's, including
50,000
RSU's each to the Company's
CEO, CFO and General Counsel pursuant to their employment agreements. A total of
35,000
RSU's of the employee RSU's vest immediately,
with the remainder over
3
years beginning November 15, 2024. The awards also included
60,000
RSU's pursuant to the agreement with
RMH, Ltd., and
30,000
RSU's to the Company's former President. These consultant awards vest on November 15, 2024.
On March 7, 2024, the Company entered into an Amendment No. 1 to Common
Stock Purchase Agreement (the "Amendment") with White Lion. Pursuant to the Amendment, the Company and White Lion agreed to
a fixed number of Commitment Shares equal to
440,000
shares of common stock to be issued to White Lion in consideration for commitments
of White Lion under the Common Stock Purchase Agreement, which the Company agreed to include all of the Commitment Shares on the Initial
Registration Statement filed by the Company. The Company has not yet issued the additional
301,878
shares of common stock to White Lion.
In addition, pursuant
to the Amendment, the Company may, from time to time while a Purchase Notice is active, issue a Rapid Purchase Notice to White Lion which
the parties will close on the Rapid Purchase within two Business Days of the applicable Rapid Purchase Date. Furthermore, White Lion agreed
that, on any single Business Day, it shall not publicly resell an aggregate amount of Commitment Shares in an amount that exceeds
7
% of
the daily trading volume of the Common Stock for the preceding Business Day.
Finally, pursuant to
the Amendment, the Company's right
to sell shares of common stock to White Lion will
now extend until December 31, 2026.
On
April 18, 2024, the Company and FIBT entered into a Second Amendment to Term Loan Agreement (the "Amendment") effective as
of March 31, 2024. Pursuant to the Amendment, the Term Loan Agreement was modified to provide that the Company must, on or before December
31, 2024, deposit funds in a Debt Service Reserve Account (as defined in the Loan Agreement) such that the balance of the account equals
$
5,000,000
and FIBT waived the provision that such amount had to be deposited within 60 days of the closing date of the Loan Agreement.
In addition, the Amendment provides that, if at any time prior to December 31, 2024, the Company or any of its affiliates enter into a
sale leaseback transaction with respect to any of its equipment, the Company will deposit an amount equal to the greater of (A) $
500,000
or (B)
10
% of the proceeds of such transaction into the Debt Service Reserve Account on the effective date of such sale and leaseback
transaction.
On April 17, 2024, the
Company received a notice (the "NYSE Notice") from the NYSE American LLC (the "NYSE American") that the Company
is not in compliance with NYSE American listing standards as a result of its failure to timely file its Annual Report on Form 10-K for
the fiscal year ended December 31, 2023 (the "Form 10-K") with the SEC.
The NYSE Notice had no immediate effect on the
listing of the Company's Class A Common Stock or the Company's public warrants on the NYSE American. The NYSE Notice informed
the Company that, under NYSE American rules, the Company has six months from April 16, 2024 to regain compliance with the NYSE American
listing standards by filing the Form 10-K with the SEC. If the Company fails to file the Form 10-K within the six-month period, the NYSE
American may grant, in its sole discretion, an extension of up to six additional months for the Company to regain compliance, depending
on the specific circumstances. The NYSE Notice also notes that the NYSE American may nevertheless commence delisting proceedings at any
time if it deems that the circumstances warrant.
F-
32
NOTE 13 — SUPPLEMENTAL
DISCLOSURE OF OIL AND NATURAL GAS OPERATIONS (UNAUDITED)
The Company has only
one
reportable operating segment, which is oil and natural gas development, exploration, and production in the United States. See
the Company's accompanying consolidated statements of operations for information about results of operations for oil and gas producing
activities.
Capitalized Costs
Related to Crude Oil and Natural Gas Producing Activities
Aggregate capitalized
costs related to crude oil and natural gas exploration and production activities with applicable accumulated depreciation, depletion,
and amortization are presented below as of the dates indicated:
As of December 31,
2023
2022
Oil and natural gas properties
Successor
Predecessor
Proved
$
94,189,372
$
64,799,213
Less: accumulated depreciation, depletion, and amortization
(
352,127
)
(
9,592,296
)
Net oil and natural gas properties capitalized costs
$
93,837,245
$
55,206,917
Costs Incurred for Oil and Natural Gas
Producing Activities
Costs incurred in crude oil and natural gas
exploration and development for the periods presented:
Successor
Predecessor
November 15, 2023 to
December 31,
2023
January 1,
2023 to
November 14,
2023
For the
year ended
December 31,
2022
Exploration costs
$
-
$
-
$
1,031,300
Development costs
238,499
6,769,557
15,048,100
Total
$
238,499
$
6,769,557
$
16,079,400
F-
33
Reserve Quantity
Information
The following information
represents estimates of the Company's proved reserves as of December 31, 2023 and 2022, which have been prepared by an independent
third party and they are presented in accordance with SEC rules. These rules require SEC reporting companies to prepare their reserve
estimates using specified reserve definitions and pricing based on a 12-month unweighted average of the first-day-of-the-month pricing.
The pricing that was used for estimates of the Company's reserves as of December 31, 2023 and 2022 was based on an unweighted
average 12-month average U.S. Energy Information Administration WTI posted price per Bbl for oil and Henry Hub prices for natural
gas price per Mcf for natural gas, adjusted for transportation, quality and basis differentials.
Subject to limited exceptions,
proved undeveloped reserves may only be booked if they relate to wells scheduled to be drilled within five years of the date of
booking. This requirement has limited and may continue to limit, the Company's potential to record additional proved undeveloped
reserves as it pursues its drilling program. Moreover, the Company may be required to write down its proved undeveloped reserves if it
does not drill on those reserves within the required five-year timeframe. The Company does not have any proved undeveloped reserves which
have remained undeveloped for five years or more. The Company's proved oil and natural gas reserves are located in the United States
in the Permian Basin of southeast New Mexico. Proved reserves were estimated in accordance with the guidelines established by the SEC
and the FASB. Oil and natural gas reserve quantity estimates are subject to numerous uncertainties inherent in the estimation of
quantities of proved reserves and in the projection of future rates of production and the timing of development expenditures. The accuracy
of such estimates is a function of the quality of available data and of engineering and geological interpretation and judgment. Results
of subsequent drilling, testing and production may cause either upward or downward revision of previous estimates. Further, the volumes
considered to be commercially recoverable fluctuate with changes in prices and operating costs. The Company emphasizes that reserve estimates
are inherently imprecise and that estimates of new discoveries are more imprecise than those of currently producing oil and natural gas
properties. Accordingly, these estimates are expected to change as additional information becomes available in the future.
The following table
and subsequent narrative disclosure provides a roll forward of the total proved reserves for the years ended December 31, 2023
and 2022 as well as proved developed and proved undeveloped reserves at the beginning and end of each respective year:
For the years ended December 31,
2023
2022
Oil
(MBbls)
Natural
Gas
(MMcf)
Total
(MBoe)
Oil
(MBbls)
Natural
Gas
(MMcf)
Total
(MBoe)
Proved Reserves:
Beginning of period
17,577
4,572
18,339
17,868
3,714
18,487
Extensions and discoveries
1,817
495
1,901
—
—
—
Dispositions
(
1,758
)
(
457
)
(
1,834
)
—
—
—
Revisions to previous estimates
(
1,758
)
(
729
)
(
1,995
)
106
1,315
325
Production
(
349
)
(
356
)
(
409
)
(
397
)
(
457
)
(
473
)
End of period
15,414
3,525
16,002
17,577
4,572
18,339
Proved Developed Reserves:
Beginning of period
13,014
3,572
13,609
13,161
2,875
13,640
End of period
11,277
2,675
11,723
13,014
3,572
13,609
Proved Undeveloped Reserves:
Beginning of period
4,564
1,000
4,730
4,707
839
4,847
End of period
4,137
850
4,279
4,564
1,000
4,730
F-
34
Extensions and discoveries.
For the
year ended December 31, 2023 and 2022, extensions and discoveries contributed to the increase of
1,901
MBoe and
0
MBoe, respectively,
in the Company's proved reserves. The increase of extensions and discoveries in 2023 is due to the Company's development of
the Seven Rivers waterflood.
Dispositions:
For
the year ended December 31, 2023, dispositions represent the removal of reserves attributed to the sale of an undivided royalty interest
equal in amount to ten percent (
10
%) by the Predecessor to Pogo Royalty of the Predecessor's all oil, gas and minerals in, under
and produced from each lease.
Revisions of previous
estimates.
For the year ended December 31, 2023, revisions of previous estimates resulted in the decrease of reserves with
a negative revision of
1,995
MBoe in the Company's proved reserves. The negative revision in 2023 is primarily attributable to
the decrease in year-end SEC commodity prices for oil and natural gas.
For the year ended December 31,
2022, revisions of previous estimates partially offset the decrease in reserves with a positive revision of
325
MBoe in the Company's
proved reserves. The positive revision in 2022 is primarily attributable to the increase in year-end SEC commodity prices for oil and
natural gas.
Standardized Measure
of Discounted Future Net Cash Flows
The standardized measure
of discounted future net cash flows does not purport to be, nor should it be interpreted to present, the fair value of the oil and natural
gas reserves of a property. An estimate of fair value would take into account, among other things, the recovery of reserves not presently
classified as proved, the value of unproved properties and consideration of expected future economic and operating conditions.
The estimates of future
cash flows and future production and development costs as of December 31, 2023 and 2022 are based on the unweighted arithmetic average
first-day-of-the-month price for the preceding 12-month period. Estimated future production of proved reserves and estimated future production
and development costs of proved reserves are based on current costs and economic conditions. All wellhead prices are held flat over the
forecast period for all reserve categories. The estimated future net cash flows are then discounted at a rate of
10
%.
The standardized measure
of discounted future net cash flows relating to proved oil and natural gas reserves is as follows:
For the year ended
December 31,
2023
2022
Successor
Predecessor
(in thousands)
Future cash inflows
$
1,216,840
$
1,680,514
Future production costs
(
438,653
)
(
451,155
)
Future development costs
(
94,156
)
(
124,216
)
Future net cash flows
684,031
1,105,143
10
% annual discount for estimated timing of cash flows
(
403,413
)
(
585,596
)
Standardized measure of discounted future net cash flows
$
280,618
$
519,547
In the foregoing determination
of future cash inflows, sales prices used for oil and natural gas for December 31, 2023 and 2022 were estimated using the average
price during the 12-month period, determined as the unweighted arithmetic average of the first-day-of-the-month price for each month.
Prices were adjusted by lease for quality, transportation fees and regional price differentials. Future costs of developing and producing
the proved gas and oil reserves reported at the end of each year shown were based on costs determined at each such year-end, assuming
the continuation of existing economic conditions. Furthermore, future development costs include abandonment costs.
F-
35
It is not intended that
the FASB's standardized measure of discounted future net cash flows represent the fair market value of the Company's proved
reserves. The Company cautions that the disclosures shown are based on estimates of proved reserve quantities and future production schedules
which are inherently imprecise and subject to revision and the
10
% discount rate is arbitrary. In addition, costs and prices as of the
measurement date are used in the determinations and no value may be assigned to probable or possible reserves.
Changes in the standardized
measure of discounted future net cash flows relating to proved oil and natural gas reserves are as follows:
For the year ended
December 31,
2023
2022
(in thousands)
Balance, beginning of period (Predecessor)
$
519,547
$
307,409
Net change in sales and transfer prices and in production (lifting) costs related to future production
(
95,981
)
176,448
Sales and transfers of oil and natural gas produced during the period
(
22,914
)
(
23,501
)
Changes in estimated future development costs
(
2,313
)
12,926
)
Previously estimated development incurred during the period
7,008
2,100
Net purchases (divestitures) of reserves in place
(
138,893
)
—
Net change due to revisions in quantity estimates
(
45,534
)
9,217
Net change due to extensions and discoveries, and improved recovery
—
—
Accretion of discount
51,955
30,741
Timing and other differences
7,742
4,207
Standardized measure of discounted future net cash flows (Successor for 2023, Predecessor for 2022)
$
280,618
$
519,547
F-
36
EON RESOURCES INC.
F/K/A HNR ACQUISITION CORP
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30,
2024
December 31,
2023
(Unaudited)
ASSETS
Cash
$
2,746,896
$
3,505,454
Accounts receivable
Crude oil and natural gas
2,059,863
2,103,341
Other
1,301
90,163
Short-term derivative instrument asset
628,513
391,488
Prepaid expenses and other current assets
544,209
722,002
Total current assets
5,980,782
6,812,448
Crude oil and natural gas properties, successful efforts method:
Proved properties
98,870,589
94,189,372
Accumulated depreciation, depletion, amortization and impairment
(
1,858,369
)
(
352,127
)
Total oil and natural gas properties, net
97,012,220
93,837,245
Other property, plant and equipment, net
20,000
-
Long-term derivative instrument asset
165,682
76,199
Total assets
$
103,178,684
$
100,725,892
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable
$
7,988,044
$
4,795,208
Accrued liabilities and other
7,390,370
4,422,183
Revenue and royalties payable
1,971,897
461,773
Revenue and royalties payable – related parties
247,572
1,523,138
Deferred underwriting fee payable
1,140,000
1,300,000
Related party notes payable, net of discount
3,827,976
2,359,048
Warrant liability, current portion
5,672,604
-
Current portion of long-term debt
10,914,900
4,157,602
Forward purchase agreement liability
5,628,863
1,094,097
Total current liabilities
44,782,226
20,113,049
Long-term debt, net of current portion and financing costs
28,840,078
37,486,206
Warrant liability
-
4,777,971
Deferred tax liability
3,758,161
6,163,140
Asset retirement obligations
988,223
904,297
Other liabilities
675,000
675,000
Total non-current liabilities
34,261,462
50,006,614
Total liabilities
79,043,688
70,119,663
Commitments and Contingencies (Note 10)
Stockholders' equity
Preferred stock, $
0.0001
par value;
1,000,000
authorized shares,
0
shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively
-
-
Class A common stock, $
0.0001
par value;
100,000,000
authorized shares,
6,957,334
shares issued and outstanding at September 30, 2024 and December 31, 2023
696
524
Class B common stock, $
0.0001
par value;
20,000,000
authorized shares,
1,379,675
and
1,800,000
shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively
138
180
Additional paid-in capital
21,864,561
16,317,856
Accumulated deficit
(
28,291,213
)
(
19,118,745
)
Total stockholders' (deficit) equity attributable to Eon Resources, Inc.
(
6,425,818
)
(
2,800,185
)
Noncontrolling interest
30,560,814
33,406,414
Total stockholders' equity
24,134,996
30,606,229
Total liabilities and stockholders' equity
$
103,178,684
$
100,725,892
The accompanying notes are an integral part of
these unaudited condensed consolidated financial statements.
F-
37
EON RESOURCES INC.
F/K/A HNR ACQUISITION CORP
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Successor
Successor
Predecessor
Predecessor
Three months
Ended
September 30,
2024
Nine months
Ended
September 30,
2024
Three months
Ended
September 30,
2023
Nine months
Ended
September 30,
2023
Revenues
Crude oil
$
5,275,254
$
15,132,363
$
6,314,104
$
19,814,847
Natural gas and natural gas liquids
89,978
396,670
256,741
719,383
Gain (loss) on derivative instruments, net
1,900,662
(
180,063
)
(
1,436,100
)
(
673,057
)
Other revenue
98,452
359,270
143,714
461,435
Total revenues
7,364,346
15,708,240
5,278,459
20,322,608
Expenses
Production taxes, transportation and processing
489,524
1,326,789
602,449
1,774,310
Lease operating
2,136,732
6,530,431
2,449,140
7,354,304
Depletion, depreciation and amortization
507,626
1,506,242
426,838
1,285,830
Accretion of asset retirement obligations
10,395
83,926
200,789
809,423
General and administrative
2,235,263
6,868,749
981,751
3,111,130
Total expenses
5,379,540
16,316,137
4,660,967
14,334,997
Operating income (loss)
1,984,806
(
607,897
)
617,492
5,987,611
Other Income (expenses)
Change in fair value of warrant liability
(
137,911
)
(
484,799
)
-
-
Change in fair value of FPA liability
(
4,209,294
)
(
4,534,766
)
-
-
Amortization of debt discount
(
507,701
)
(
1,982,958
)
-
-
Interest expense
(
1,841,848
)
(
5,732,747
)
(
554,262
)
(
1,429,200
)
Interest income
14,852
44,214
92,520
266,771
Gain on extinguishment of liabilities
-
1,720,000
-
-
Loss on sale of assets
(
816,011
)
(
816,011
)
Other Income (expense)
-
1,506
9,109
(
74,692
)
Total other income (expenses)
(
6,681,902
)
(
10,969,550
)
(
1,268,644
)
(
2,053,132
)
Loss before income taxes
(
4,697,096
)
(
11,577,447
)
(
651,152
)
3,934,479
Income tax (provision) benefit
855,925
2,404,979
-
-
Net income (loss)
(
3,841,171
)
(
9,172,468
)
(
651,152
)
3,934,479
Net income (loss) attributable to noncontrolling interests
-
-
-
-
Net income (loss) attributable to EON Resources, Inc.
$
(
3,841,171
)
$
(
9,172,468
)
$
(
651,152
)
$
3,934,479
Weighted average share outstanding, common stock - basic and diluted
5,733,857
5,483,959
-
-
Net income (loss) per share of common stock – basic and diluted
$
(
0.67
)
$
(
1.67
)
$
-
$
-
The accompanying notes are an integral part of
these unaudited condensed consolidated financial statements.
F-
38
EON RESOURCES INC.
F/K/A HNR ACQUISITION CORP
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES
IN STOCKHOLDERS'/OWNERS' EQUITY (DEFICIT)
(Unaudited)
Predecessor
Owners'
Equity
Balance at December 31, 2022
$
28,504,247
Net income
1,908,871
Balance at March 31, 2023
30,413,118
Net income
2,676,760
Balance at June 30, 2023
33,089,878
Net income
(
651,152
)
Balance at September 30, 2023
$
32,438,726
Total
Stockholders'
Class A
Class B
Additional
(Deficit) Equity
Attributable to
HNR
Total
Stockholders'
Common Stock
Common Stock
Paid-In
Accumulated
Acquisition
Noncontrolling
(Deficit)
Successor
Shares
Amount
Shares
Amount
Capital
Deficit
Corp.
Interest
Equity
Balance – December 31, 2023
5,235,131
$
524
1,800,000
$
180
$
16,317,856
$
(
19,118,745
)
$
(
2,800,185
)
$
33,406,414
$
30,606,229
Share-based compensation
-
-
-
-
699,248
-
699,248
-
699,248
Net loss
-
-
-
-
-
(
4,693,502
)
(
4,693,502
)
-
(
4,693,502
)
Balance – March 31, 2024
5,235,131
524
1,800,000
180
17,017,104
(
23,812,247
)
(
6,794,439
)
33,406,414
26,611,975
Share-based compensation
301,878
30
-
-
490,690
-
490,720
-
490,720
Net loss
-
-
-
-
-
(
637,795
)
(
637,795
)
-
(
637,795
)
Balance – June 30, 2024
5,537,009
$
554
1,800,000
$
180
$
17,507,794
$
(
24,450,042
)
$
(
6,941,514
)
$
33,406,414
$
26,464,900
Shares issued under equity line of credit
1,000,000
100
-
-
1,184,172
-
1,184,272
-
1,184,272
Class B exchanged for class A
420,325
42
(
420,325
)
(
42
)
2,845,600
2,845,600
(
2,845,600
)
-
Share-based compensation
-
-
-
-
326,995
-
326,995
-
326,995
Net loss
-
-
-
-
-
(
3,841,171
)
(
3,841,171
)
-
(
3,841,171
)
Balance – September 30, 2024
6,957,334
$
696
1,379,675
$
138
$
21,864,561
$
(
28,291,213
)
$
(
6,425,818
)
30,560,814
$
24,134,996
The accompanying notes are an integral part of
these unaudited condensed consolidated financial statements.
F-
39
EON RESOURCES INC.
F/K/A HNR ACQUISITION CORP
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Successor
Predecessor
September 30,
2024
September 30,
2023
Operating activities:
Net income
$
(
9,172,468
)
$
3,934,479
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion, and amortization expense
1,506,242
1,285,830
Accretion of asset retirement obligations
83,926
809,423
Equity-based compensation
1,516,963
-
Deferred income tax benefit
(
2,404,979
)
-
Amortization of operating lease right-of-use assets
-
(
448
)
Amortization of debt issuance costs
1,982,958
3,334
Gain on extinguishment of liabilities
(
1,720,000
)
-
Change in fair value of unsettled derivatives
(
326,508
)
(
226,338
)
Change in fair value of warrant liability
484,799
-
Change in fair value of forward purchase agreement
4,534,766
-
Change in other property, plant, and equipment, net
-
83,004
Loss on sale of assets
-
816,011
Changes in operating assets and liabilities:
Accounts receivable
132,340
(
198,571
)
Prepaid expenses and other assets
177,793
(
53,155
)
Related party note receivable interest income
-
(
266,771
)
Accounts payable
1,787,285
626,309
Accrued liabilities and other
3,028,687
325,992
Royalties payable
1,510,124
364,404
Royalties payable, related party
224,434
808,329
Net cash provided by operating activities
3,346,362
8,311,832
Investing activities:
Development of crude oil and gas properties
(
3,275,667
)
(
4,867,872
)
Purchases of other equipment
(
20,000
)
-
Trust Account withdrawals
-
-
Issuance of related party note receivable
-
(
190,997
)
Net cash used in investing activities
(
3,295,667
)
(
5,058,869
)
Financing activities:
Repayments of long-term debt
(
2,945,312
)
(
2,000,000
)
Proceeds of short-term notes payable
967,500
Repayment of short-term notes payable
(
421,963
)
Proceeds from related party notes payable
450,000
-
Repayment of related party notes payable
(
43,750
)
-
Proceeds from sale of common stock
1,184,272
-
Net cash provided by financing activities
(
809,253
)
(
2,000,000
)
Net change in cash and cash equivalents
(
758,558
)
1,252,963
Cash and cash equivalents at beginning of period
3,505,454
2,016,315
Cash and cash equivalents at end of period
$
2,746,896
$
3,269,278
Cash paid during the period for:
Interest on debt
$
3,489,041
$
1,509,755
Income taxes
$
-
$
-
Amounts included in the measurement of operating lease liabilities
$
-
$
56,625
Supplemental disclosure of non-cash investing and financing
    activities:
Exchange of Class B Units for Class A Common stock
$
2,845,600
$
-
Accrued purchases of property and equipment at period end
$
1,405,550
$
1,740,662
The accompanying notes are an integral part of
these unaudited condensed consolidated financial statements.
F-
40
EON RESOURCES INC.
F/K/A HNR ACQUISITION CORP
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 — DESCRIPTION OF ORGANIZATION AND BUSINESS
OPERATIONS
Organization and General
EON Resources, Inc. (formerly HNR Acquisition
Corp) (the "Company") was incorporated in Delaware on December 9, 2020. The Company was a blank check company formed
for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination
with one or more businesses (the "Business Combination"). The Company is an "emerging growth company," as defined
in Section 2(a) of the Securities Act of 1933, as amended, or the "Securities Act," as modified by the
Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"). On September 16, 2024, the Company filed a Certificate
of Amendment (the "Certificate of Amendment") to its Amended and Restated Certificate of Incorporation with the Secretary
of State of the State of Delaware to change the Company's name from "HNR Acquisition Corp" to "EON Resources Inc.",
effective on September 17, 2024.
The registration statement for the Company's
IPO was declared effective on February 10, 2022 (the "Effective Date"). On February 15, 2022, the Company consummated the
IPO of
7,500,000
units (the "Units" and, with respect to the common stock included in the Units sold, the "Public Shares"),
at $
10.00
per Unit. Additionally, the underwriter fully exercised its option to purchase
1,125,000
additional Units. Simultaneously with
the closing of the IPO, the Company consummated the sale of
505,000
units (the "Private Placement Units") at a price of $
10.00
per unit generating proceeds of $
5,050,000
in a private placement to HNRAC Sponsors, LLC, the Company's sponsor (the "Sponsor")
and EF Hutton (formerly Kingswood Capital Markets) ("EF Hutton").
The Sponsor and other parties, purchased, in the
aggregate,
505,000
units ("Private Placement Units") at a price of $
10.00
per Private Placement Unit in a private placement
which included a share of common stock and warrant to purchase three quarters of
one
share of common stock at an exercise price of $
11.50
per share, subject to certain adjustments ("Private Placement Warrants" and together, the "Private Placement")
that occurred immediately prior to the Public Offering.
Effective November 15,
2023, the Company completed its business combination as described in Note 3. Through its subsidiary Pogo Resources, LLC, a Texas limited
liability Company "("Pogo" or "Pogo Resources") and its subsidiary LH Operating, LLC, a Texas limited liability
company "("LHO"), the Company is an independent oil and natural gas company focused on the acquisition, development,
exploration, and production of oil and natural gas properties in the Permian Basin. The Permian Basin is located in west Texas and southeastern
New Mexico and is characterized by high oil and liquids-rich natural gas content, multiple vertical and horizontal target horizons, extensive
production histories, long-lived reserves and historically high drilling success rates. The Company's properties are in the Grayburg-Jackson
Field in Eddy County, New Mexico, which is a sub-area of the Permian Basin. The Company focuses exclusively on vertical development drilling.
Inflation Reduction Act of 2022
On August 16, 2022, the Inflation Reduction Act
of 2022 (the "IR Act") was signed into federal law. The IR Act provides for, among other things, a new U.S. federal
1
% excise
tax on certain repurchases (including redemptions) of stock by publicly traded U.S. domestic corporations and certain U.S. domestic subsidiaries
of publicly traded foreign corporations occurring on or after January 1, 2023. The excise tax is imposed on the repurchasing corporation
itself, not its stockholders from which shares are repurchased. The amount of the excise tax is generally
1
% of the fair market value
of the shares repurchased at the time of the repurchase. However, for purposes of calculating the excise tax, repurchasing corporations
are permitted to net the fair market value of certain new stock issuances against the fair market value of stock repurchases during the
same taxable year. In addition, certain exceptions apply to the excise tax. The U.S. Department of the Treasury (the "Treasury")
has been given authority to provide regulations and other guidance to carry out and prevent the abuse or avoidance of the excise tax.
F-
41
Any redemption or other repurchase that occurs
after December 31, 2022, in connection with a Business Combination, extension vote or otherwise, may be subject to the excise tax. Whether
and to what extent the Company would be subject to the excise tax in connection with a Business Combination, extension vote or otherwise
would depend on a number of factors, including (i) the fair market value of the redemptions and repurchases in connection with the Business
Combination, extension or otherwise, (ii) the structure of a Business Combination, (iii) the nature and amount of any "PIPE"
or other equity issuances in connection with a Business Combination (or otherwise issued not in connection with a Business Combination
but issued within the same taxable year of a Business Combination) and (iv) the content of regulations and other guidance from the Treasury.
In addition, because the excise tax would be payable by the Company and not by the redeeming holder, the mechanics of any required payment
of the excise tax have not been determined. The foregoing could cause a reduction in the cash available on hand to complete a Business
Combination and in the Company's ability to complete a Business Combination.
On May 11, 2023, in connection with the stockholder vote for
the amendment to the Company's certificate of incorporation, a total of
4,115,597
Public Shares for an aggregate redemption amount
of $
43,318,207
were redeemed from the Trust Account by the stockholders of the Company. On November 15, 2023, a total of
3,323,707
Public
Shares were redeemed for an aggregate redemption amount of $
12,346,791
. As a result of these redemptions of common stock, the Company
recognized an estimated liability for the excise tax of $
474,837
, included in
Accrued liabilities and other
on the Company's
consolidated balance sheet pursuant to the
1
% excise tax under the IR Act partially offset by issuance of common stock subsequent to the
redemptions. The liability does not impact the consolidated statements of operations and is offset against accumulated deficit.
At September 30, 2024, the Company had $
2,746,896
,
in cash and a working capital deficit of $
38,801,444
. These conditions raise substantial doubt about the Company's ability to continue
as a going concern within one year after the date that the financial statements are issued. The Company had positive cash flow from operations
of $
3,346,362
for the nine months ended September 30, 2024 and $
8,675,037
for the year ended December 31, 2023, on a pro forma basis of
the combined Successor and Predecessor periods. Additionally, management's plans to alleviate this substantial doubt by 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 under the Common Stock Purchase Agreement. 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 Form S-1 Registration Statement, which was declared effective by the Securities and Exchange
Commission ("SEC") on August 9, 2024. Through September 30, 2024, the Company has received $
1,184,272
in cash proceeds related
to the sale of
1,000,000
shares of common stock under the Common Stock Purchase Agreement.
The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
NOTE 2 — SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Basis of Presentation:
On November 15, 2023 (the "Closing Date"),
the Company consummated a business combination which resulted in the acquisition of Pogo Resources, LLC, a Texas limited liability Company
("Pogo" or "Pogo Resources") and its subsidiary LH Operating, LLC, a Texas limited liability company ("LHO",
and collectively, the "Pogo Business") (the "Acquisition"). The Company was deemed the accounting acquirer in
the Acquisition based on an analysis of the criteria outlined in Accounting Standards Codification ("ASC") 805, Business Combinations,
and the Pogo Business was deemed to be the Predecessor entity. Accordingly, the historical consolidated financial statements of the Pogo
Business became the historical financial statements of the Company's upon consummation of the Acquisition. As a result, the financial
statements included in this report reflect (i) the historical operating results of Pogo Business prior to the Acquisition ("Predecessor")
and (ii) the combined results of the companies, including Pogo Business following the closing of the Acquisition ("Successor").
The accompanying financial statements include a Predecessor period, which was the three and nine months ended September 30, 2023, and
Successor period for the three and nine months ended September 30, 2024. As a result of the Acquisition, the results of operations, financial
position and cash flows of the Predecessor and Successor may not be directly comparable. A black-line between the Successor and Predecessor
periods has been placed in the consolidated financial statements and in the tables to the notes to the consolidated financial statements
to highlight the lack of comparability between these two periods as the Acquisition resulted in a new basis of accounting for the Pogo
Business. See Note 3 for additional information.
F-
42
The accompanying unaudited consolidated financial
statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP")
for interim financial information and in accordance with the instructions to Condensed Form 10-Q and Article 8 of Regulation
S-X of the SEC. Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP
have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they
do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or
cash flows. In the opinion of management, the accompanying unaudited consolidated financial statements include all adjustments, consisting
of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows
for the period presented.
The accompanying unaudited condensed consolidated
financial statements should be read in conjunction with the Company's Annual Report on Form 10-K as filed with the SEC on May
2, 2024. The interim results for the three and nine months ended September 30, 2024 are not necessarily indicative of the results to be
expected for the year ending December 31, 2024 or for any future periods.
Principles of Consolidation
The accompanying consolidated financial statements
include the accounts of the Company and its subsidiaries. All significant intercompany balances and transactions have been eliminated
in consolidation.
Emerging Growth Company:
Section 102(b)(1) of the JOBS Act exempts
emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that
is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered
under the Securities Exchange Act of 1934) are required to comply with the new or revised financial accounting standards.
The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply
to non-emerging growth companies but any such an election to opt out is irrevocable. The Company has elected not to opt out of such extended
transition period which means that when a standard is issued or revised and it has different application dates for public or private companies,
the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised
standard. This may make comparison of the Company's consolidated financial statements with another public company which is neither
an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible
because of the potential differences in accounting standards used.
Use of Estimates
The preparation of financial statements in conformity
with GAAP requires the Company's management to make estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Significant estimates and assumptions reflected in the financial statements include: i) estimates of proved
reserves of oil and natural gas, which affect the calculation of depletion, depreciation, and amortization ("DD&A") and
impairment of proved oil and natural gas properties, ii) impairment of undeveloped properties and other assets, iii) depreciation of property
and equipment; and iv) the valuation of commodity derivative instruments. These estimates are based on information available as of the
date of the financial statements; therefore, actual results could differ materially from management's estimates using different
assumptions or under different conditions. Future production may vary materially from estimated oil and natural gas proved reserves. Actual
future prices may vary significantly from price assumptions used for determining proved reserves and for financial reporting.
F-
43
Net Income (Loss) Per Share:
Net income (loss) per share of common stock is
computed by dividing net income (loss) applicable to common stockholders by the weighted average number of shares of common stock outstanding
during the period, excluding shares of common stock subject to forfeiture.
The Company's Class B Common shares do not
have economic rights to the undistributed earnings of the Company, and are not considered participating securities under ASC 260. As such,
they are excluded from the calculation of net income (loss) per common share.
The Company has not considered the effect of the
warrants sold in the Initial Public Offering and private placement warrants to purchase an aggregate of
6,847,500
shares and
warrants to purchase
4,413,000
shares issued in connection with Private Notes Payable in the calculation of diluted income per share,
since the effective of those instruments would be anti-dilutive. As a result, diluted income (loss) per share of common stock is
the same as basic loss per share of common stock for the period presented.
Cash
The Company considers all cash on hand, depository
accounts held by banks, money market accounts and investments with an original maturity of three months or less to be cash equivalents.
The Company's cash and cash equivalents are held in financial institutions in amounts that exceed the insurance limits of the Federal
Deposit Insurance Corporation. The Company believes its counterparty risks are minimal based on the reputation and history of the institutions
selected.
Accounts Receivable
Accounts receivable consist
of receivables from crude oil and natural gas purchasers and are generally uncollateralized. Accounts receivables are typically due within
30 to 60 days of the production date and 30 days of the billing date and are stated at amounts due from purchasers and industry
partners. Amounts are considered past due if they have been outstanding for 60 days or more. No interest is typically charged on
past due amounts.
The Company reviews its
need for an allowance for doubtful accounts on a periodic basis and determines the allowance, if any, by considering the length of time
past due, previous loss history, future net revenues associated with the debtor's ownership interest in oil and natural gas properties
operated by the Company and the debtor's ability to pay its obligations, among other things. The Company believes its accounts receivable
are fully collectible. Accordingly, no allowance for doubtful accounts has been provided.
As of September 30, 2024
and December 31, 2023, the Company had approximately
99
% and
96
% of accounts receivable with two customers, respectively.
Crude Oil and Natural
Gas Properties
The Company accounts
for its crude oil and natural gas properties under the successful efforts method of accounting. Under this method, costs of proved developed
producing properties, successful exploratory wells and developmental dry hole costs are capitalized. Internal costs that are directly
related to acquisition and development activities, including salaries and benefits, are capitalized. Internal costs related to production
and similar activities are expensed as incurred. Capitalized costs are depleted by the unit-of-production method based on estimated proved
developed producing reserves. The Company calculates quarterly depletion expense by using the estimated prior period-end reserves as the
denominator. The process of estimating and evaluating crude oil and natural gas reserves is complex, requiring significant decisions in
the evaluation of available geological, geophysical, engineering, and economic data. The data for a given property may also change substantially
over time because of numerous factors, including additional development activity, evolving production history and a continual reassessment
of the viability of production under changing economic conditions. As a result, revisions in existing reserve estimates occur. Capitalized
development costs of producing oil and natural gas properties are depleted over proved developed reserves and leasehold costs are depleted
over total proved reserves. Upon the sale or retirement of significant portions of or complete fields of depreciable or depletable property,
the net book value thereof, less proceeds or salvage value, is recognized as a gain or loss.
F-
44
Exploration costs, including
geological and geophysical expenses, seismic costs on unproved leaseholds and delay rentals are expensed as incurred. Exploratory well
drilling costs, including the cost of stratigraphic test wells, are initially capitalized, but charged to expense if the well is determined
to be economically nonproductive. The status of each in-progress well is reviewed quarterly to determine the proper accounting treatment
under the successful efforts method of accounting. Exploratory well costs continue to be capitalized so long as the Company has identified
a sufficient quantity of reserves to justify completion as a producing well, is making sufficient progress assessing reserves with economic
and operating viability, and the Company remains unable to make a final determination of productivity.
If an in-progress exploratory
well is found to be economically unsuccessful prior to the issuance of the financial statements, the costs incurred prior to the end of
the reporting period are charged to exploration expense. If the Company is unable to make a final determination about the productive status
of a well prior to issuance of the financial statements, the costs associated with the well are classified as suspended well costs until
the Company has had sufficient time to conduct additional completion or testing operations to evaluate the pertinent geological and engineering
data obtained. At the time the Company can make a final determination of a well's productive status, the well is removed from suspended
well status and the resulting accounting treatment is recorded.
The Successor recognized
depreciation, depletion, and amortization expense totaling $
507,626
and $
1,506,242
for the three and nine months ended September 30, 2024,
respectively, and the Predecessor recognized $
426,838
and $
1,285,830
for the three and nine months ended September 30, 2023, respectively.
Impairment of Oil
and Gas Properties
Proved oil and natural
gas properties are reviewed for impairment when events and circumstances indicate a possible decline in the recoverability of the carrying
amount of such property. The Company estimates the expected future cash flows of its oil and natural gas properties and compares the undiscounted
cash flows to the carrying amount of the oil and natural gas properties, on a field-by-field basis, to determine if the carrying amount
is recoverable. If the carrying amount exceeds the estimated undiscounted future cash flows, the Company will write down the carrying
amount of the oil and natural gas properties to estimated fair value.
The Company and the Predecessor
did not recognize any impairment of oil and natural gas properties in the periods presented.
Asset Retirement Obligations
The Company recognizes
the fair value of an asset retirement obligation ("ARO") in the period in which it is incurred if a reasonable estimate of
fair value can be made. The asset retirement obligation is recorded as a liability at its estimated present value, with an offsetting
increase recognized in oil and natural gas properties on the consolidated balance sheets. Periodic accretion of the discounted value of
the estimated liability is recorded as an expense in the consolidated statements of operations.
Other Property and
Equipment, net
Other property and equipment
are recorded at cost. Other property and equipment are depreciated over its estimated useful life on a straight-line basis. The Company
expenses maintenance and repairs in the period incurred. Upon retirements or dispositions of assets, the cost and related accumulated
depreciation are removed from the consolidated balance sheet with the resulting gains or losses, if any, reflected in operations.
Materials and supplies
are stated at the lower of cost or market and consist of oil and gas drilling or repair items such a tubing, casing, and pumping units.
These items are primarily acquired for use in future drilling or repair operations and are carried at lower of cost or market.
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45
The Company reviews its
long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be
recoverable. If such assets are considered impaired, the impairment to be recorded is measured by the amount by which the carrying amount
of the asset exceeds its estimated fair value. The estimated fair value is determined using either a discounted future cash flow model
or another appropriate fair value method.
Derivative Instruments
The Company uses derivative
financial instruments to mitigate its exposure to commodity price risk associated with oil prices. The Company's derivative financial
instruments are recorded on the consolidated balance sheets as either an asset or a liability measured at fair value. The Company has
elected not to apply hedge accounting for its existing derivative financial instruments, and as a result, the Company recognizes the change
in derivative fair value between reporting periods currently in its consolidated statements of operations. The fair value of the Company's
derivative financial instruments is determined using industry-standard models that consider various inputs including: (i) quoted
forward prices for commodities, (ii) time value of money and (iii) current market and contractual prices for the underlying
instruments, as well as other relevant economic measures. Realized gains and losses from the settlement of derivative financial instruments
and unrealized gains and unrealized losses from valuation changes in the remaining unsettled derivative financial instruments are reported
in a single line item as a component of revenues in the consolidated statements of operations. Cash flows from derivative contract settlements
are reflected in operating activities in the accompanying consolidated statements of cash flows. See Note 4 for additional information
about the Company's derivative instruments.
The Company's credit
risk related to derivatives is a counterparties' failure to perform under derivative contracts owed to the Company. The Company
uses credit and other financial criteria to evaluate the credit standing of, and to select, counterparties to its derivative instruments.
Although the Company does not obtain collateral or otherwise secure the fair value of its derivative instruments, associated credit risk
is mitigated by the Company's credit risk policies and procedures.
The Company has entered
into International Swap Dealers Association Master Agreements ("ISDA Agreements") with its derivative counterparty. The terms
of the ISDA Agreements provide the Company and the counterparty with rights of set off upon the occurrence of defined acts of default
by either the Company or a counterparty to a derivative, whereby the party not in default may set off all derivative liabilities owed
to the defaulting party against all derivative asset receivables from the defaulting party.
Product Revenues
The Company accounts
for sales in accordance with Accounting Standards Codification ("ASC") 606,
Revenue from Contracts with Customers
.
Revenue is recognized when the Company satisfies a performance obligation in an amount reflecting the consideration to which it expects
to be entitled. The Company applies a five-step approach in determining the amount and timing of revenue to be recognized: (1) identifying
the contract with a customer; (2) identifying the performance obligations in the contract; (3) determining the transaction price;
(4) allocating the transaction price to the performance obligations in the contract; and (5) recognizing revenue when the performance
obligation is satisfied.
The Company enters into
contracts with customers to sell its oil and natural gas production. Revenue from these contracts is recognized when the Company's
performance obligations under these contracts are satisfied, which generally occurs with the transfer of control of the oil and natural
gas to the purchaser. Control is generally considered transferred when the following criteria are met: (i) transfer of physical custody,
(ii) transfer of title, (iii) transfer of risk of loss and (iv) relinquishment of any repurchase rights or other similar
rights. Given the nature of the products sold, revenue is recognized at a point in time based on the amount of consideration the Company
expects to receive in accordance with the price specified in the contract. Consideration under oil and natural gas marketing contracts
is typically received from the purchaser one to two months after production.
Most of the Company's
oil marketing contracts transfer physical custody and title at or near the wellhead or a central delivery point, which is generally when
control of the oil has been transferred to the purchaser. The majority of the oil produced is sold under contracts using market-based
pricing, which price is then adjusted for differentials based upon delivery location and oil quality. To the extent the differentials
are incurred at or after the transfer of control of the oil, the differentials are included in oil revenues on the statements of operations,
as they represent part of the transaction price of the contract. If other related costs are incurred prior to the transfer of control
of the oil, those costs are included in production taxes, transportation and processing expenses on the Company's consolidated statements
of operations, as they represent payment for services performed outside of the contract with the customer.
F-
46
The Company's natural
gas is sold at the lease location. Most of the Company's natural gas is sold under gas purchase agreements. Under the gas purchase
agreements, the Company receives a percentage of the net production from the sale of the natural gas and residue gas, less associated
expenses incurred by the buyer.
The Company does not
disclose the value of unsatisfied performance obligations under its contracts with customers as it applies the practical expedient in
accordance with ASC 606. The expedient, as described in ASC 606-10-50-14(a), applies to variable consideration that is recognized
as control of the product is transferred to the customer. Since each unit of product represents a separate performance obligation, future
volumes are wholly unsatisfied, and disclosure of the transaction price allocated to remaining performance obligations is not required.
Customers
The Company and the Predecessor,
respectively, sold
100
% of its crude oil and natural gas production to two customers for the nine months ended September 30, 2024
and 2023. Inherent to the industry is the concentration of crude oil, natural gas and natural gas liquids ("NGLs") sales to
a limited number of customers. This concentration has the potential to impact the Company's overall exposure to credit risk in that
its customers may be similarly affected by changes in economic and financial conditions, commodity prices or other conditions. Given the
liquidity in the market for the sale of hydrocarbons, the Company believes the loss of any single purchaser, or the aggregate loss of
several purchasers, could be managed by selling to alternative purchasers in the operating areas.
Warranty Obligations
The Company provides
an assurance-type warranty that guarantees its products comply with agreed-upon specifications. This warranty is not sold separately and
does not convey any additional goods or services to the customer; therefore, the warranty is not considered a separate performance obligation.
As the Company typically incurs minimal claims under the warranties, no liability is estimated at the time goods are delivered, but rather
at the point of a claim.
Other Revenue
Other revenue is generated
from the fees the Company charges a single customer for the disposal of water, saltwater, brine, brackish water, and other water (collectively,
"Water") into the Company's water injection system. Revenue recognized under the agreement is variable in nature and
primarily based on the volume of Water accepted during the period.
Warrant Liabilities
The Company provides
an assurance-type warranty that guarantees its products comply with agreed-upon specifications. This warranty is not sold separately and
does not convey any additional goods or services to the customer; therefore, the warranty is not considered a separate performance obligation.
As the Company typically incurs minimal claims under the warranties, no liability is estimated at the time goods are delivered, but rather
at the point of a claim.
Other Revenue
Other revenue is generated
from the fees the Company charges a single customer for the disposal of water, saltwater, brine, brackish water, and other water (collectively,
"Water") into the Company's water injection system. Revenue recognized under the agreement is variable in nature and
primarily based on the volume of Water accepted during the period.
Warrant Liabilities
The Company accounts for warrants as either equity-classified
or liability-classified instruments based on an assessment of the warrant's specific terms and applicable authoritative guidance
in Financial Accounting Standards Board ("FASB") Accounting Standards Codification ASC 480, Distinguishing Liabilities from
Equity ("ASC 480") and ASC 815, Derivatives and Hedging ("ASC 815"). The assessment considers whether the warrants
are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants
meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company's
own common stock, among other conditions for equity classification. This assessment is conducted at the time of warrant issuance and as
of each subsequent quarterly period end date while the warrants are outstanding.
In accordance with Accounting
Standards Codification ASC 815-40, Derivatives and Hedging—Contracts in Entity's Own Equity, the warrants issued in connection
with the Private Notes Payable do not meet the criteria for equity classification due to the redemption right whereby the holder may require
the Company to settle the warrant in cash 18 months after the closing of the MIPA, and must be recorded as liabilities. The warrants are
measured at fair value at inception and at each reporting date in accordance with ASC 820
, Fair Value Measurement
, with changes
in fair value recognized in the statements of operations in the period of change. The Public Warrants issued in connection with the Company's
initial public offering are classified as equity instruments.
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47
Forward Purchase Agreement Valuation
The Company has determined
that the Forward Purchase Agreement Put Option, including the Maturity Consideration, within the Forward Purchase Agreement is (i) a freestanding
financial instrument and (ii) a liability (i.e., an in-substance written put option). This liability was recorded as a liability at fair
value on the consolidated balance sheet as of the reporting date in accordance with ASC 480. The fair value of the liability was estimated
using a Monte-Carlo Simulation in a risk-neutral framework. Specifically, the future stock price is simulated assuming a Geometric Brownian
Motion ("GBM"). For each simulated path, the forward purchase value is calculated based on the contractual terms and then
discounted back to present. Finally, the value of the forward is calculated as the average present value over all simulated paths. The
model also considered the likelihood of a dilutive offering of common stock.
Concentration of Credit Risk
Financial instruments that potentially subject
the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed the Federal
Depository Insurance Coverage ("FDIC") of $
250,000
. As of September 30, 2024, the Company's cash balances exceeded the
FDIC limit by $
2,404,329
. At September 30, 2024, the Company had not experienced losses on this account and management believes the Company
is not exposed to significant risks on such account.
Income Taxes
The Company follows the asset and liability method
of accounting for income taxes under FASB ASC 740, "Income Taxes." Deferred tax assets and liabilities are recognized
for the estimated future tax consequences attributable to differences between the financial statements carrying amounts of existing assets
and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply
to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred
tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation
allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The Company is subject
to income tax examinations by major taxing authorities since inception. The Company's effective tax rate was approximately
18
% and
21
% for the three and nine months ended September 30, 2024, respectively.
FASB ASC 740 prescribes a recognition threshold
and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in
a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing
authorities. There were no unrecognized tax benefits as of September 30, 2024 and December 31, 2023. The Company recognizes accrued interest
and penalties related to unrecognized tax benefits as income tax expense. No amounts were accrued for the payment of interest and penalties
at September 30, 2024 and December 31, 2023. The Company is currently not aware of any issues under review that could result in significant
payments, accruals, or material deviation from its position.
Prior the closing of the Acquisition, the Predecessor
elected to be treated as a partnership for income tax purposes and was not subject to federal, state, or local income taxes. Any taxable
income or loss was recognized by the owners. Accordingly, no federal, state, or local income taxes have been reflected in the accompanying
consolidated financial statements of the Predecessor. Significant differences may exist between the results of operations reported in
these consolidated financial statements and those determined for income tax purposes primarily due to the use of different asset valuation
methods for tax purposes.
Recent Accounting Pronouncements
In November 2023, the FASB issued Accounting Standards
Update (ASU) 2023-07,
Segment Reporting (Topic 280) — Improvements to Reportable Segment Disclosures
, which adds new
disclosure requirements related to significant segment expenses regularly provided to the chief operating decision maker (CODM) and included
in each reported measure of segment profit or loss, other segment items that constitute the difference between segment revenues less significant
segment expenses and the measure of profit or loss, disclosure of the CODM's title and position as well as an explanation of how the CODM
uses the reported measures and expanded interim disclosures. ASU 2023-07 is effective for financial statements for annual periods beginning
after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, and as a result, will require additional
segment expense disclosures when adopted in the Company's Form 10-K for the year ended December 31, 2024 and in periodic reports thereafter.
In December 2023, the FASB issued ASU 2023-09,
Income
Taxes (Topic 740) — Improvements to Income Tax Disclosures
. Under this ASU, entities must disclose, on an annual basis, specific
categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. In
addition, ASU 2023-09 requires entities to disclose additional information about income taxes paid. ASU 2023-09 is
effective for financial statements for annual periods beginning after December 15, 2024. The Company is currently evaluating the potential
impact of adopting this guidance on the consolidated financial statements and the notes to consolidated financial statements.
Other than described above, management does not
believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect
on the Company's consolidated financial statements.
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48
NOTE 3 — BUSINESS COMBINATION
The Company entered into that certain Amended and Restated Membership
Interest Purchase Agreement, dated as of August 28, 2023 (as amended, the "MIPA"), by and among the Company, HNRA Upstream,
LLC, a newly formed Delaware limited liability company which is managed by, and is a subsidiary of, the Company ("OpCo"),
and HNRA Partner, Inc., a newly formed Delaware corporation and wholly owned subsidiary of OpCo ("SPAC Subsidiary", and together
with the Company and OpCo, "Buyer" and each a "Buyer"), CIC Pogo LP, a Delaware limited partnership ("CIC"),
DenCo Resources, LLC, a Texas limited liability company ("DenCo"), Pogo Resources Management, LLC, a Texas limited liability
company ("Pogo Management"), 4400 Holdings, LLC, a Texas limited liability company ("4400" and, together with
CIC, DenCo and Pogo Management, collectively, "Seller" and each a "Seller"), and, solely with respect to Section
6.20 of the MIPA, the Sponsor.
On November 15, 2023 (the "Closing Date"),
as contemplated by the MIPA:
●
The Company filed a Second Amended and Restated Certificate of Incorporation (the "Second A&R Charter") with the Secretary of State of the State of Delaware, pursuant to which the number of authorized shares of the Company's capital stock, par value $
0.0001
per share, was increased to
121,000,000
shares, consisting of (i)
100,000,000
shares of Class A common stock, par value $
0.0001
per share (the "Class A Common Stock"), (ii)
20,000,000
shares of Class B common stock, par value $
0.0001
per share (the "Class B Common Stock"), and (iii)
1,000,000
shares of preferred stock, par value $
0.0001
per share;
●
The current shares of common stock of the Company were reclassified as Class A Common Stock, and a new class of common stock (the Class B Common Stock) was created, which have no economic rights but entitle its holder to one vote on all matters to be voted on by stockholders generally, holders of shares of Class A Common Stock and shares of Class B Common Stock will vote together as a single class on all matters presented to our stockholders for their vote or approval, except as otherwise required by applicable law or by the Second A&R Charter;
●
(A) the Company contributed to OpCo (i) all of its assets (excluding its interests in OpCo and the aggregate amount of cash required to satisfy any exercise by the Company's stockholders of their Redemption Rights (as defined below)) and (ii)
2,000,000
newly issued shares of Class B Common Stock (such shares, the "Seller Class B Shares") and (B) in exchange therefor, OpCo issued to the Company a number of Class A common units of OpCo (the "OpCo Class A Units") equal to the number of total shares of Class A Common Stock issued and outstanding immediately after the closing (the "Closing") of the transactions (the "Transactions") contemplated by the Company (following the exercise by the Company's stockholders of their Redemption Rights) (such transactions, the "SPAC Contribution");
●
Immediately following the SPAC Contribution, OpCo contributed $
900,000
to SPAC Subsidiary in exchange for
100
% of the outstanding common stock of SPAC Subsidiary (the "SPAC Subsidiary Contribution"); and
●
Immediately following the SPAC Subsidiary Contribution, Seller sold, contributed, assigned, and conveyed to (A) OpCo, and OpCo acquired and accepted from Seller, ninety-nine percent (
99.0
%) of the outstanding membership interests of Pogo Resources, LLC, a Texas limited liability company ("Pogo" or the "Target"), and (B) SPAC Subsidiary, and SPAC Subsidiary purchased and accepted from Seller, one percent (
1.0
%) of the outstanding membership interest of Target (together with the ninety-nine (
99.0
%) interest, the "Target Interests"), in each case, in exchange for (x) $
900,000
of the Cash Consideration (as defined below) in the case of SPAC Subsidiary and (y) the remainder of the Aggregate Consideration (as defined below) in the case of OpCo (such transactions, together with the SPAC Contribution and SPAC Subsidiary Contribution, the "Acquisition").
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49
The "Aggregate Consideration" for the Pogo Business was
(a) cash in the amount of $
31,074,127
in immediately available funds (the "Cash Consideration"), (b)
2,000,000
Class B common
units of OpCo ("OpCo Class B Units") (the "Common Unit Consideration"), which will be equal to and exchangeable
into
2,000,000
shares of Class A Common Stock issuable upon exercise of the OpCo Exchange Right (as defined below), as reflected
in the amended and restated limited liability company agreement of OpCo that became effective at Closing (the "A&R OpCo LLC
Agreement"), (c) the
2,000,000
Seller Class B Shares, (d) $
15,000,000
payable through a promissory note to Seller (the "Seller
Promissory Note"), (e)
1,500,000
preferred units of OpCo (the "OpCo Preferred Units" and together with the Opco Class
A Units and the OpCo Class B Units, the "OpCo Units") of OpCo (the "Preferred Unit Consideration", and, together
with the Common Unit Consideration, the "Unit Consideration"), and (f) an agreement to, on or before November 21, 2023, Buyer
to settle and pay to Seller $
1,925,873
from sales proceeds received from oil and gas production attributable to Pogo, including pursuant
to its third party contract with affiliates of Chevron. At Closing,
500,000
Seller Class B Shares (the "Escrowed Share Consideration")
were placed in escrow for the benefit of Buyer pursuant to an escrow agreement and the indemnity provisions in the MIPA. The Aggregate
Consideration is subject to adjustment in accordance with the MIPA.
OpCo A&R LLC Agreement
In connection with the Closing, the Company and Pogo Royalty, LLC,
a Texas limited liability company, an affiliate of Seller and Seller's designated recipient of the Aggregate Consideration ("Pogo
Royalty"), entered into an amended and restated limited liability company agreement of OpCo (the "OpCo A&R LLC Agreement").
Pursuant to the A&R OpCo LLC Agreement, each OpCo unitholder (excluding the Company) will, subject to certain timing procedures and
other conditions set forth therein, have the right(the "OpCo Exchange Right") to exchange all or a portion of its OpCo Class
B Units for, at OpCo's election,(i) shares of Class A Common Stock at an exchange ratio of
one
share of Class A Common Stock for
each OpCo Class B Unit exchanged, subject to conversion rate adjustments for stock splits, stock dividends and reclassifications and other
similar transactions, or (ii) an equivalent amount of cash. Additionally, the holders of OpCo Class B Units will be required to exchange
all of their OpCo Class B Units (a "Mandatory Exchange") upon the occurrence of the following: (i) upon the direction of the
Company with the consent of at least fifty percent (
50
%) of the holders of OpCo Class B Units; or (ii) upon the one-year anniversary of
the Mandatory Conversion Trigger Date. In connection with any exchange of OpCo Class B Units pursuant to the OpCo Exchange Right or acquisition
of OpCo Class B Units pursuant to a Mandatory Exchange, a corresponding number of shares of Class B Common Stock held by the relevant
OpCo unitholder will be cancelled.
Immediately upon the Closing, Pogo Royalty exercised
the OpCo Exchange Right as it relates to
200,000
OpCo Class B units (and
200,000
shares of Class B Common Stock).
The OpCo Preferred Units will be automatically
converted into OpCo Class B Units on the two-year anniversary of the issuance date of such OpCo Preferred Units (the "Mandatory
Conversion Trigger Date") at a rate determined by dividing (i) $
20.00
per unit (the "Stated Conversion Value"),
by (ii) the Market Price of the Class A Common Stock, (the "Conversion Price"). The "Market Price" means
the simple average of the daily VWAP of the Class A Common Stock during the five (
5
) trading days prior to the date of conversion.
On the Mandatory Conversion Trigger Date, the Company will issue a number of shares of Class B Common Stock to Seller equivalent
to the number of OpCo Class B Units issued to Seller. If not exchanged sooner, such newly issued OpCo Class B Units shall
automatically exchange into Class A Common Stock on the one-year anniversary of the Mandatory Conversion Trigger Date at a ratio
of one OpCo Class B Unit for one share of Class Common Stock. An equivalent number of shares of Class B Common Stock must
be surrendered with the OpCo Class B Units to the Company in exchange for the Class A Common Stock. As noted above, the
OpCo Class B Units must be exchanged upon the one-year anniversary of the Mandatory Conversion Trigger Date.
F-
50
Option Agreement
In connection with the Closing, HNRA Royalties, LLC, a newly formed
Delaware limited liability company and wholly-owned subsidiary of the Company ("HNRA Royalties") and Pogo Royalty entered
into an Option Agreement (the "Option Agreement"). Pogo Royalty owns certain overriding royalty interests in certain oil and
gas assets owned by Pogo Resources, LLC (the "ORR Interest"). Pursuant to the Option Agreement, Pogo Royalty granted irrevocable
and exclusive option to HNRA Royalties to purchase the ORR Interest for the Option Price (as defined below) at any time prior to November
15, 2024. The option is not exercisable while the Seller Promissory Note is outstanding.
The purchase price for the ORR Interest upon exercise
of the option is: (i) (1) $
30,000,000
the ("Base Option Price"), plus (2) an additional amount equal to interest
on the Base Option Price of twelve percent (
12
%), compounded monthly, from the Closing Date through the date of acquisition of the ORR
Interest, minus (ii) any amounts received by Pogo Royalty in respect of the ORR Interest from the month of production in which the
effective date of the Option Agreement occurs through the date of the exercise of the option (such aggregate purchase price, the "Option
Price").
The Option Agreement and the option will immediately
terminate upon the earlier of (a) Pogo Royalty's transfer or assignment of all of the ORR Interest in accordance with the Option
Agreement and (b) November 15, 2024. As consideration for the Option Agreement, the Company issued
10,000
shares of Class A common
stock to Pogo Royalty with a fair value of $
67,700
. Pogo Royalty obtained the ORR Interest effective July 1, 2023, when the Predecessor
transferred to Pogo Royalty an assigned and undivided royalty interest equal in amount to ten percent (
10
%) of the Predecessors'
interest all oil, gas and minerals in, under and produced from each lease. The Predecessor recognized a loss on sale of assets of $
816,011
in connection with this transaction.
Backstop Agreement
In connection with the Closing, the Company entered a Backstop Agreement
(the "Backstop Agreement") with Pogo Royalty and certain of the Company's founders listed therein (the "Founders")
whereby Pogo Royalty will have the right ("Put Right") to cause the Founders to purchase Seller's OpCo Preferred Units at
a purchase price per unit equal to $
10.00
per unit plus the product of (i) the number of days elapsed since the effective date
of the Backstop Agreement and (ii) $
10.00
divided by 730. Seller's right to exercise the Put Right will survive for six (6) months
following the date the Trust Shares (as defined below) are not restricted from transfer under the Letter Agreement (as defined in the
MIPA) (the "Lockup Expiration Date").
As security that the Founders will be able to
purchase the OpCo Preferred Units upon exercise of the Put Right, the Founders agreed to place at least
1,300,000
shares of
Class A Common Stock into escrow (the "Trust Shares"), which the Founders can sell or borrow against to meet their obligations
upon exercise of the Put Right, with the prior consent of Seller. The Company is not obligated to purchase the OpCo Preferred Units from
Pogo Royalty under the Backstop Agreement. Until the Backstop Agreement is terminated, Pogo Royalty and its affiliates are not permitted
to engage in any transaction which is designed to sell short the Class A Common Stock or any other publicly traded securities of
the Company.
In connection with the Closing, the Company entered a Founder Pledge
Agreement (the "Founder Pledge Agreement") with the Founders whereby, in consideration of placing the Trust Shares into escrow
and entering into the Backstop Agreement, the Company agreed: (a) by January 15, 2024, to issue to the Founders an aggregate number of
newly issued shares of Class A Common Stock equal to
10
% of the number of Trust Shares; (b) by January 15, 2024, to issue to the Founders
number of warrants to purchase an aggregate number of shares of Class A Common Stock equal to
10
% of the number of Trust Shares, which
such warrants shall be exercisable for
five years
from issuance at an exercise price of $
11.50
per shares; (c) if the Backstop Agreement
is not terminated prior to the Lockup Expiration Date, to issue an aggregate number of newly issued shares of Class A Common Stock equal
to (i) (A) the number of Trust Shares,
divided by
(B) the simple average of the daily VWAP of the Class A Common
Stock during the five (5) Trading Days prior to the date of the termination of the Backstop Agreement, subject to a minimum of $
6.50
per
share,
multiplied by
(C) a price between $
10.00
-$
13.00
per share (as further described in the Founder Pledge Agreement),
minus
(ii)
the number of Trust Shares; and (d) following the purchase of OpCo Preferred Units by a Founder pursuant to the Put Right, to issue
a number of newly issued shares of Class A Common Stock equal to the number of Trust Shares sold by such Founder. Until the
Founder Pledge Agreement is terminated, the Founders are not permitted to engage in any transaction which is designed to sell short the
Class A Common Stock or any other publicly traded securities of the Company.
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51
The Acquisition was accounted for as a business
combination under ASC 805. The preliminary purchase price of the Pogo Business has been allocated to the assets acquired and liabilities
assumed based on their estimated relative fair values. The purchase price allocations herein are preliminary. The final purchase price
allocations for the Acquisition will be determined after completion of a thorough analysis to determine the fair value of all assets acquired
and liabilities assumed but in no event later than one year following the closing date of the Acquisition. Accordingly, the final acquisition
accounting adjustments could differ materially from the accounting adjustments included in these consolidated financial statements.
Any
increase or decrease in the fair value of the assets acquired and liabilities assumed, as compared to the information shown herein, could
also change the portion of purchase price allocable to goodwill and could impact the operating results of the Company following the Acquisition
due to differences in purchase price allocation, depreciation and amortization related to some of these assets and liabilities.
Purchase Price:
Cash
$
31,074,127
Side Letter payable
1,925,873
Promissory note to Sellers of Pogo Business
15,000,000
10,000
Company Class A Common shares for Option Agreement
67,700
200,000
Company Class A Common shares
1,354,000
1,800,000
OpCo Class B Units
12,186,000
1,500,000
OpCo Preferred Units
21,220,594
Total purchase consideration
$
82,828,294
Purchase Price Allocation
Cash
$
246,323
Accounts receivable
3,986,559
Prepaid expenses
368,371
Oil & gas reserves
93,809,392
Derivative assets
51,907
Accounts payable
(
2,290,475
)
Accrued liabilities and other
(
1,244,633
)
Revenue and royalties payable
(
775,154
)
Revenue and royalties payable, related parties
(
1,199,420
)
Short-term derivative liabilities
(
27,569
)
Deferred tax liabilities
(
8,528,772
)
Asset retirement obligations, net
(
893,235
)
Other liabilities
(
675,000
)
Net assets acquired
$
82,828,294
As of September 30, 2024, the Company owes $
645,873
of the Side Letter payable, included in accrued expenses and other current liabilities on the consolidated balance sheet.
Effective June 20, 2024, the Company and the Seller entered into a
settlement agreement and Release (the "Settlement Agreement"). Under the Settlement Agreement, and in settlement of the working
capital provisions of the Amended MIPA, the Seller agreed to waive all rights and claims to the amount of royalties payable under the
ORRI as of December 31, 2023, totaling $
1,500,000
and agreed to pay certain amounts related to vendor payable claims assumed by the Company
at Closing totaling $
220,00
. During the nine months ended September 30, 2024, the Company recognized a gain on settlement of liabilities
of $
1,720,000
related to the Settlement Agreement, included in other income on the unaudited consolidated statement of operations.
F-
52
Unaudited Pro Forma
Financial Information
The following table sets
forth the pro-forma consolidated results of operations of the combined Successor Predecessor companies for the three and nine months ended
September 30, 2023 as if the Acquisition occurred on January 1, 2023.
The pro forma results of operations are presented for informational
purposes only and are not indicative of the results of operations that would have been achieved if the acquisitions had taken place on
the dates noted above, or of results that may occur in the future.
Three Months
ended
September 30,
2023
Nine Months
ended
September 30,
2023
Revenue
$
4,621,375
$
17,883,362
Operating income (loss)
(
1,058,877
)
637,518
Net income (loss)
(
3,617,495
)
(
5,654,484
)
Net income (loss) per common share
$
(
0.70
)
(
1.10
)
Weighted Average common shares outstanding
5,145,446
5,145,446
The following table sets
forth the derivative volumes by period as of September 30, 2024 for the Company:
Price collars
Period
Volume
(Bbls/month)
Weighted
average
floor price
($/Bbl)
Weighted
average
ceiling price
($/Bbl)
Weighted
average
sold call
($/Bbl)
Q4 2024
9,000
$
70.00
$
85.50
$
85.50
Crude price differential
swaps
During the year ended
December 31, 2023, the Company has entered into commodity swap contracts that are effective over the next 1 to 24 months and are used
to hedge against location price risk of the respective commodity resulting from supply and demand volatility and protect cash flows against
price fluctuations.
The following table reflects the weighted-average price of open commodity swap contracts as of September 30, 2024:
Commodity Swaps
Weighted
average
Period
Volume
(Bbls/month)
price
($/Bbl)
Q4 2024
2,250
$
70.89
Q1-Q4 2025
5,000
$
70.21
F-
53
Derivative Assets and Liabilities
As of September 30, 2024
and December 31, 2023, the Company is conducting derivative activities with one counterparty, which is secured by the lender in the Company's
bank credit facility. The Company believes the counterparty is acceptable credit risk, and the credit worthiness of the counterparty is
subject to periodic review. The assets and liabilities are netted given that all positions are held by a single counterparty and subject
to a master netting arrangement.
The combined fair value of derivatives included in the accompanying consolidated balance sheets as of
September 30, 2024 and December 31, 2023 is summarized below.
As of September 30, 2024
Gross fair
value
Amounts
netted
Net fair
value
Commodity derivatives:
Short-term derivative asset
$
631,851
$
(
3,338
)
$
628,513
Long-term derivative asset
165,682
—
165,682
Short-term derivative liability
(
3,338
)
3,338
-
Long-term derivative liability
—
-
Total derivative liability
$
794,195
As of December 31, 2023
(Successor)
Gross fair
value
Amounts
netted
Net fair
value
Commodity derivatives:
Short-term derivative asset
$
583,035
$
(
191,547
)
$
391,488
Long-term derivative asset
76,199
—
76,199
Short-term derivative liability
(
191,547
)
(
191,547
)
—
Long-term derivative liability
—
—
—
Total derivative asset
$
467,687
The effects of the Company's derivatives
on the consolidated statements of operations are summarized below:
Three Months
Ended
September 30,
2024
Nine Months
Ended
September 30,
2024
Three Months
Ended
September 30,
2023
Nine Months
Ended
September 30,
2023
Successor
Predecessor
Total gain (loss) on unsettled derivatives
$
2,008,631
$
326,508
$
(
835,360
)
$
226,338
Total gain (loss) on settled derivatives
(
107,969
)
(
506,571
)
(
600,740
)
(
899,395
)
Net gain (loss) on derivatives
$
1,900,662
$
(
180,063
)
$
(
1,436,100
)
$
(
673,057
)
F-
54
NOTE 5 — LONG-TERM DEBT AND
NOTES PAYABLE
The Company's debt instruments are as follows:
September 30,
2024
December 31,
2023
Senior Secured Term Loan
$
24,735,391
$
27,680,703
Seller Promissory Note
15,000,000
15,000,000
Merchant Cash Advances
1,019,037
-
Private loans
3,875,750
3,469,500
Total
44,630,178
46,150,203
Less: unamortized financing cost
(
1,046,837
)
(
2,147,346
)
Less: current portion including amortization
(
14,743,263
)
(
6,516,651
)
Long-term debt, net of current portion
$
28,840,078
$
37,486,206
Senior Secured Term Loan Agreement
In connection with the Closing, the Company (for purposes of the Loan
Agreement, the "Borrower") and First International Bank & Trust ("FIBT" or "Lender"), OpCo,
SPAC Subsidiary, Pogo, and LH Operating, LLC (for purposes of the Loan Agreement, collectively, the "Guarantors" and together
with the Borrower, the "Loan Parties"), and FIBT entered into a Senior Secured Term Loan Agreement on November 15, 2023 (the
"Loan Agreement"), setting forth the terms of a senior secured term loan facility in an aggregate principal amount of $
28,000,000
(the "Term Loan").
Pursuant to the terms
of the Term Loan Agreement, the Term Loan was advanced in one tranche on the Closing Date. The proceeds of the Term Loan were used to
(a) fund a portion of the purchase price, (b) partially fund a debt service reserve account funded with $
2,600,000
at the Closing
Date, (c) pay fees and expenses in connection with the purchase and the closing of the Term Loan and (e) other general corporate purposes.
The Term Loan accrues interest at a per annum rate equal to the FIBT prime rate plus
6.5
% and fully matures on the third anniversary of
the Closing Date ("Maturity Date").
Payments of principal and interest will be due on the 15
th
day of
each calendar month, beginning December 15, 2023, each in an amount equal to the Monthly Payment Amount (as defined in the Term Loan Agreement),
except that the principal and interest payment due on the Maturity Date will be in the amount of the entire remaining principal amount
of the Term Loan and all accrued but unpaid interest then outstanding. An additional one-time payment of principal is due on the date
the annual financial report for the year ending December 31, 2024, is due to be delivered by Borrower to Lender in an amount that Excess
Cash Flow (as defined in the Term Loan Agreement) exceeds the Debt Service Coverage Ratio (as defined in the Term Loan Agreement) of 1.35x
as of the end of such quarter; provided that in no event shall the amount of the payment exceed $5,000,000.
The Borrower may elect
to prepay all or a portion greater than $1,000,000 of the amounts owed prior to the Maturity Date. In addition to the foregoing, the Borrower
is required to prepay the Term Loan with the net cash proceeds of certain dispositions and upon the decrease in value of collateral.
On the Closing Date,
Borrower deposited $
2,600,000
into a Debt Service Reserve Account (the "Debt Service Reserve Account") and, within 60 days
following the Closing Date, Borrower must deposit such additional amounts such that the balance of the Debt Service Reserve Account is
equal to $
5,000,000
at all times. The Debt Service Reserve Account may be used by Lender at any time and from time to time, in Lender's
sole discretion, to pay (or to supplement Borrower's payments of) the obligations due under the Term Loan Agreement.  As of
March 31, 2024, the Company was not in compliance with the Debt Service Reserve Account balance.
On
April 18, 2024, the Company and FIBT entered into a Second Amendment to Term Loan Agreement (the "Amendment") effective as
of March 31, 2024. Pursuant to the Amendment, the Term Loan Agreement was modified to provide that the Company must, on or before December
31, 2024, deposit funds in a Debt Service Reserve Account (as defined in the Loan Agreement) such that the balance of the account equals
$
5,000,000
and FIBT waived the provision that such amount had to be deposited within 60 days of the closing date of the Loan Agreement.
In addition, the Amendment provides that, if at any time prior to December 31, 2024, the Company or any of its affiliates enter into a
sale leaseback transaction with respect to any of its equipment, the Company will deposit an amount equal to the greater of (A) $
500,000
or (B)
10
% of the proceeds of such transaction into the Debt Service Reserve Account on the effective date of such sale and leaseback
transaction.
F-
55
The Term Loan Agreement
contains affirmative and restrictive covenants and representations and warranties. The Loan Parties are bound by certain affirmative covenants
setting forth actions that are required during the term of the Term Loan Agreement, including, without limitation, certain information
delivery requirements, obligations to maintain certain insurance, and certain notice requirements. Additionally, the Loan Parties from
time to time will be bound by certain restrictive covenants setting forth actions that are not permitted to be taken during the term of
the Term Loan Agreement without prior written consent, including, without limitation, incurring certain additional indebtedness, entering
into certain hedging contracts, consummating certain mergers, acquisitions or other business combination transactions, consummating certain
dispositions of assets, making certain payments on subordinated debt, making certain investments, entering into certain transactions with
affiliates, and incurring any non-permitted lien or other encumbrance on assets. The Term Loan Agreement also contains other customary
provisions, such as confidentiality obligations and indemnification rights for the benefit of the Lender. The Company was in compliance
with covenants of the Term Loan Agreement as of September 30, 2024.
For the nine months ended
September 30, 2024, the Company amortized $
295,474
to interest expense related to deferred finance costs on the Term Loan Agreement. As
of September 30, 2024, the principal balance on the Term Loan was
$24,735,391
, unamortized financing costs was $
741,421
and accrued
interest was $
177,829
. As of December 31, 2023, the principal balance on the Term Loan was $
27,680,703
, unamortized financing costs was $
1,036,895
and accrued interest was $
173,004
.
Pledge and Security Agreement
In connection with the
Term Loan, FIBT and the Loan Parties entered into a Pledge and Security Agreement on November 15, 2023 (the "Security Agreement"),
whereby the Loan Parties granted a senior security interest to FIBT on all assets of the Loan Parties, except certain excluded assets
described therein, including, among other things, any interests in the ORR Interest.
Guaranty Agreement
In connection with the
Term Loan, FIBT and the Loan Parties entered into a Guaranty Agreement on November 15, 2023 (the "Guaranty Agreement"),
whereby the Guarantors guaranteed payment and performance of all Loan Parties under the Term Loan Agreement.
Subordination Agreement
In connection with the
Term Loan and the Seller Promissory Note, the Lenders, the Sellers and the Company entered into a Subordination Agreement whereby the
Sellers cannot require repayment, nor commence any action or proceeding at law or equity against the Company or the Lenders to recover
any or all of the unpaid Seller Promissory Note until the Term Loan is repaid in full.
Seller Promissory
Note
In connection with the Closing, OpCo issued the
Seller Promissory Note to Pogo Royalty in the principal amount of $
15,000,000
. The Seller Promissory Note matures on May 15, 2024, bears
an interest rate equal
12
% per annum, and contains no penalty for prepayment. As the Seller Promissory Note was not repaid in full prior
to its stated maturity date, OpCo will owe interest from and after default equal to the lesser of
18
% per annum and the highest amount
permissible under law, compounded monthly. The Seller Promissory Note is subordinated to the Term Loan as discussed above. Accrued interest
on the Seller Promissory Note was $
2,293,767
and $
277,397
as of September 30, 2024 and December 31, 2023, respectively. As a result of
the Subordination Agreement, the Company has classified the Seller Promissory Note as a long-term liability on the consolidated balance
sheet.
F-
56
Private Notes Payable
Prior to December 31, 2023, the Company entered
into various unsecured promissory notes with existing investors of the Company for total principal of $
5,434,000
(the "Private Notes
Payable"). The Private Notes Payable bear interest at the greater of
15
% or the highest rate allowed under law, and have a stated
maturity date of the five-year anniversary of the closing of the MIPA. The investors may demand repayment beginning six months after the
closing of the MIPA. The investors also received common stock warrants equal to the principal amount funded. Each warrant entitles the
holder to purchase three quarters of one share of common stock at a price of $
11.50
. Each warrant will become exercisable on the closing
date of the MIPA and is exercisable through the five-year anniversary of the promissory note agreement date. The warrants also grant the
holder a one-time redemption right to require the Company pay the holder in cash equal to $
1
per warrant 18 months following the closing
of the MIPA, or May 15, 2025. Based on the redemption right present in these warrants, the warrants are accounted for as a liability in
accordance with ASC 480 and ASC 815 and a debt discount on the Private Notes Payable, with the changes in fair value of the warrants recognize
in the statement of operations.
During the nine months
ended September 30, 2024, the Company received an additional $
450,000
in cash proceeds under unsecured promissory notes with investors
with the same terms as those described above. The Company issued an additional
450,000
warrants with an exercise price of $
11.50
to
these investors in connection with the agreements. There are a total of
5,884,000
warrants issued to these investors.
The Company is amortizing the debt discount through
a period of nine months from the Closing Date. The Company recognized amortization of debt discount of $
1,472,012
during the nine months
ended September 30, 2024. Accrued interest on the promissory notes was $
143,463
and $
158,801
as of September 30, 2024 and December 31,
2023, respectively.
Merchant Cash Advances
On July 1, 2024, the Company entered into a merchant
cash advance agreement with a third party. The Company borrowed $
525,000
and received $
500,000
in cash proceeds. The Company will repay
an aggregate of $
756,000
on a weekly basis through
March 2025
. The difference between the proceeds received and the total repayment was
recognized as debt discount, and is amortized through the maturity date. As of September 30, 2024, the remaining balance owed on this
advance was $
548,100
.
On July 15, 2024, the Company entered into a subordinated
business loan and security agreement with a third party. The Company received cash proceeds of $
500,000
, and will repay an aggregate of
$
685,000
to the lender on a weekly basis through
February 2025
. As of September 30, 2024, the remaining balance owed on this advance was
$
470,937
.
As of September 30, 2024, there was $
294,133
of
unamortized discount related to the merchant cash advances, and the Company recognized $
179,367
of amortization of debt discount related
to the advances.
Future Maturities of Long-term debt
The following summarizes the Company's maturities
of debt instruments:
Principal
Twelve Months Ended:
September 30, 2025
$
15,048,293
September 30, 2026
6,263,296
September 30, 2027
23,318,589
September 30, 2028
—
Total
$
44,630,178
F-
57
NOTE 6 — FORWARD
PURCHASE AGREMENT
Forward Purchase
Agreement
On November 2, 2023,
the Company entered into an agreement with (i) Meteora Capital Partners, LP ("MCP"), (ii) Meteora Select Trading Opportunities
Master, LP ("MSTO"), and (iii) Meteora Strategic Capital, LLC ("MSC" and, collectively with MCP and MSTO, "FPA
Seller") (the "Forward Purchase Agreement") for OTC Equity Prepaid Forward Transactions. For purposes of the Forward
Purchase Agreement, the Company is referred to as the "Counterparty". Capitalized terms used herein but not otherwise defined
shall have the meanings ascribed to such terms in the Forward Purchase Agreement.
The Forward Purchase
Agreement provides for a prepayment shortfall in an amount in U.S. dollars equal to
0.50
% of the product of the Recycled Shares and the
Initial Price (defined below). FPA Seller in its sole discretion may sell Recycled Shares (i) at any time following November 2, 2023 (the
"Trade Date") at prices greater than the Reset Price or (ii) commencing on the 180th day following the Trade Date at any sales
price, in either case without payment by FPA Seller of any Early Termination Obligation until such time as the proceeds from such sales
equal
100
% of the Prepayment Shortfall (as set forth under the section entitled "Shortfall Sales" in the Forward Purchase
Agreement) (such sales, "Shortfall Sales," and such Shares, "Shortfall Sale Shares"). A sale of Shares is only
(a) a "Shortfall Sale," subject to the terms and conditions herein applicable to Shortfall Sale Shares, when a Shortfall Sale
Notice is delivered under the Forward Purchase Agreement, and (b) an Optional Early Termination, subject to the terms and conditions of
the Forward Purchase Agreement applicable to Terminated Shares, when an OET Notice is delivered under the Forward Purchase Agreement,
in each case the delivery of such notice in the sole discretion of the FPA Seller (as further described in the "Optional Early Termination"
and "Shortfall Sales" sections in the Forward Purchase Agreement).
Following the Closing,
the reset price (the "Reset Price") will be $
10.00
; provided that the Reset Price shall be reduced pursuant to a Dilutive
Offering Reset immediately upon the occurrence of such Dilutive Offering. The Purchased Amount subject to the Forward Purchase Agreement
shall be increased upon the occurrence of a Dilutive Offering Reset to that number of Shares equal to the quotient of (i) the Purchased
Amount divided by (ii) the quotient of (a) the price of such Dilutive Offering divided by (b) $
10.00
.
From time to time and
on any date following the Trade Date (any such date, an "OET Date") and subject to the terms and conditions in the Forward
Purchase Agreement, FPA Seller may, in its absolute discretion, terminate the Transaction in whole or in part by providing written notice
to Counterparty (the "OET Notice"), by the later of (a) the fifth Local Business Day following the OET Date and (b) no later
than the next Payment Date following the OET Date, (which shall specify the quantity by which the Number of Shares shall be reduced (such
quantity, the "Terminated Shares")). The effect of an OET Notice shall be to reduce the Number of Shares by the number of
Terminated Shares specified in such OET Notice with effect as of the related OET Date. As of each OET Date, Counterparty shall be entitled
to an amount from FPA Seller, and the FPA Seller shall pay to Counterparty an amount, equal to the product of (x) the number of Terminated
Shares and (y) the Reset Price in respect of such OET Date. The payment date may be changed within a quarter at the mutual agreement of
the parties.
The "Valuation
Date" will be the earlier to occur of (a) the date that is three (
3
) years after the date of the closing of the Purchase & Sale
(the date of the closing of the Purchase & Sale, the "Closing Date") pursuant to the A&R MIPA, (b) the date specified
by FPA Seller in a written notice to be delivered to Counterparty at FPA Seller's discretion (which Valuation Date shall not be
earlier than the day such notice is effective) after the occurrence of any of (w) a VWAP Trigger Event, (x) a Delisting Event, (y) a Registration
Failure or (z) unless otherwise specified therein, upon any Additional Termination Event, and (c) the date specified by FPA Seller in
a written notice to be delivered to Counterparty at FPA Seller's sole discretion (which Valuation Date shall not be earlier than
the day such notice is effective). The Valuation Date notice will become effective immediately upon its delivery from FPA Seller to Counterparty
in accordance with the Forward Share Purchase Agreement.
F-
58
On the "Cash Settlement
Payment Date," which is the tenth Local Business Day immediately following the last day of the Valuation Period, the FPA Seller
will remit to the Counterparty an amount equal to the Settlement Amount and will not otherwise be required to return to the Counterparty
any of the Prepayment Amount and the Counterparty shall remit to the FPA Seller the Settlement Amount Adjustment; provided, that if the
Settlement Amount less the Settlement Amount Adjustment is a negative number and either clause (x) of Settlement Amount Adjustment applies
or the Counterparty has elected pursuant to clause (y) of Settlement Amount Adjustment to pay the Settlement Amount Adjustment in cash,
then neither the FPA Seller nor the Counterparty shall be liable to the other party for any payment under the Cash Settlement Payment
Date section of the Forward Purchase Agreement.
The FPA Seller
has agreed to waive any redemption rights with respect to any Recycled Shares in connection with the Closing, as well as any redemption
rights under the Company's certificate of incorporation that would require redemption by the Company.
Pursuant to the Forward
Purchase Agreement, the FPA Seller obtained
50,070
shares ("Recycled Shares") and such purchase price of $
545,356
, or $
10.95
per
share, was funded by the use of HNRA trust account proceeds as a partial prepayment ("Prepayment Amount"), and the FPA
Seller may purchase an additional
504,425
additional shares under the Forward Purchase Agreement, for the Forward Purchase Agreement redemption
3 years
from the date of the Acquisition ("Maturity Date").
On May 13, 2024, the
FPA Seller alleged that the Company is in breach of the Forward Purchase Agreement related to the issuance of the
504,525
additional shares
specified in the Forward Purchase Agreement. The Company has not been notified of any formal legal action by the FPA Seller but believes
that it has complied with the terms and conditions of the Forward Purchase Agreement.
The Maturity Date may
be accelerated, at the FPA Sellers' discretion, if the Company share price trades below $
3.00
per share for any
10
trading
days during a
30
-day consecutive trading-day period or the Company is delisted. The Company's common stock traded below minimum
trading price during the period from November 15, 2023 to December 31, 2023, but no acceleration of the Maturity Date has been executed
by the FPA Seller to date.
The fair value of the
prepayment was $
14,257,648
at inception of the agreement, $
6,066,324
as of the Closing date and was $
6,067,094
as of December 31, 2023,
and is included as a reduction of additional paid-in capital on the consolidated statement of stockholders' equity. The estimated
fair value of the Maturity Consideration was $
1,704,416
at inception of the agreement and was $
5,628,863
as of September 30, 2024. The
Company recognized a loss from the change in fair value of the Forward Purchase Agreement of $
4,209,294
and $
4,534,766
during the three
and nine months ended September 30, 2024 respectively.
NOTE 7 — STOCKHOLDERS'
EQUITY
the Closing, Pogo Royalty
exercised the OpCo Exchange Right as it relates to
200,000
OpCo Class B units (and
200,000
shares of Class B Common Stock), and received
200,000
shares of Class A common stock. During the nine months ended, Pogo Royalty exercises its OpCo Exchange Right related to
420,325
shares of Class B units and received
420,325
shares of Class A Common stock. As a result of the exchange, ta total of $
2,845,600
was reclassified
from noncontrolling interest to additional paid in capital.
As of September 30, 2024, there were
6,957,334
shares of Class A common
stock and
1,379,675
shares of Class B common stock outstanding.
F-
59
On March 4, 2024, the Compensation Committee of
the Board of Directors approved awards of restricted stock units ("RSU's") to various employees, non-employee directors
and consultants. Non-employee directors received an aggregate of
224,500
RSU's, with
112,000
RSU's vesting over
3
years beginning
November 15, 2024, and
112,500
RSU's fully vesting at November 15, 2024. Employees received a total of
285,000
RSU's, including
50,000
RSU's each to the Company's CEO, CFO and General Counsel pursuant to their employment agreements. A total of
35,000
RSU's of the employee RSU's vest immediately, with the remainder over
3
years beginning November 15, 2024. The awards also
included
60,000
RSU's pursuant to the agreement with RMH, Ltd., and
30,000
RSU's to the Company's former President.
These consultant awards vest on November 15, 2024. The Company estimated the fair value of the RSU's using the stock price of $
1.97
per share on the date of grant.
During the nine months ended September 30, 2024, the Company agree
to issue
27,963
shares of Class A common stock to officers and employees for shares pledged as collateral on the Company's Senior
Secured Term Loan, which vest immediately. The Company estimated the fair value of the shares using the closing stock price on the date
of the grant of $
2.01
and recognized stock-based compensation expense of $
56,708
.
During the nine months ended September 30, 2024,
the Company issued
75,000
shares of Class A common stock to a consultant, which vest annually over three years. The Company estimated
the fair value of the shares using the closing stock price on the date of the grant of $
2.06
per share. The Company recognized $
17,167
of stock-based compensation expense related to this award.
During the nine months ended September 30, 2024,
the Company issued
60,000
shares of Class A common stock to the Company's former CEO pursuant to his termination agreement, which
vested immediately. The Company estimated the fair value of the shares using the closing stock price on the date of the grant of $
1.80
per share and recognized stock-based compensation expense of $
108,000
.
The Company recognized total stock-based compensation
expense of $
1,516,933
during the nine months ended September 30, 2024 and expects to recognize an additional $
656,453
through December
31, 2026 assuming all awards vest.
Common Stock Purchase Agreement
On October 17, 2022, the Company entered into
a common stock purchase agreement (as amended, the "Common Stock Purchase Agreement") and a related registration rights agreement
(the "White Lion RRA") with White Lion Capital, LLC, a Nevada limited liability company ("White Lion"). Pursuant
to the Common Stock Purchase Agreement, the Company has the right, but not the obligation to require White Lion to purchase, from time
to time, up to $
150,000,000
in aggregate gross purchase price of newly issued shares of the Company's common stock, par value $
0.0001
per share, subject to certain limitations and conditions set forth in the Common Stock Purchase Agreement. Capitalized terms used but
not otherwise defined herein shall have the meaning given to such terms by the Common Stock Purchase Agreement.
Subject to the satisfaction of certain customary
conditions including, without limitation, the effectiveness of a registration statement registering the shares issuable pursuant to the
Common Stock Purchase Agreement, the Company's right to sell shares to White Lion will commence on the effective date of the registration
statement and extend until December 31, 2026. During such term, subject to the terms and conditions of the Common Stock Purchase Agreement,
the Company may notify White Lion when the Company exercises its right to sell shares (the effective date of such notice, a "Notice
Date"). The number of shares sold pursuant to any such notice may not exceed (i) the lower of (a) $
2,000,000
and (b) the dollar
amount equal to the product of (1) the Effective Daily Trading Volume (2) the closing price of common stock on the Effective Date (3)
400
% and (4)
30
%, divided by the closing price of common stock on NYSE American preceding the Notice Date and (ii) a number of shares
of common stock equal to the Average Daily Trading Volume multiplied by the Percentage Limit.
F-
60
The purchase price to be paid by White Lion for
any such shares will equal
96
% of the lowest daily volume-weighted average price of common stock during a period of
two
consecutive trading
days
following the applicable Notice Date.
The Company will have the right to terminate the
Common Stock Purchase Agreement at any time after Commencement, at no cost or penalty, upon three trading days' prior written notice.
Additionally, White Lion will have the right to terminate the Common Stock Purchase Agreement upon
three days
' prior written notice
to the Company if (i) there is a Fundamental Transaction, (ii) the Company is in breach or default in any material respect of the White
Lion RRA, (iii) there is a lapse of the effectiveness, or unavailability of, the Registration Statement for a period of 45 consecutive
trading days or for more than an aggregate of 90 trading days in any 365-day period, (iv) the suspension of trading of the common stock
for a period of five consecutive trading days, (v) the material breach of the Common Stock Purchase Agreement by the Company, which breach
is not cured within the applicable cure period or (vi) a Material Adverse Effect has occurred and is continuing. No termination of the
Common Stock Purchase Agreement will affect the registration rights provisions contained in the White Lion RRA.
On March 7, 2024, the
Company entered into an Amendment No. 1 to Common Stock Purchase Agreement (the "Amendment") with White Lion. Pursuant to
the Amendment, the Company and White Lion agreed to a fixed number of Commitment Shares equal to
440,000
shares of common stock to be
issued to White Lion in consideration for commitments of White Lion under the Common Stock Purchase Agreement, which the Company agreed
to include all of the Commitment Shares on the Initial Registration Statement filed by the Company. The Company recognized share-based
compensation expense of $
573,568
related to the Amendment.
Finally, pursuant to
the Amendment, the Company's right
to sell shares of common stock to White Lion will
now extend until December 31, 2026.
On June 17, 2024, the
Company entered into an Amendment No. 2 to Common Stock Purchase Agreement (the "2nd Amendment") with White Lion. Pursuant
to the 2nd Amendment, the Company and White Lion agreed to amend the process of a Rapid Purchase, whereby the parties will close on the
Rapid Purchase on the trading day the notice of the applicable Rapid Purchase is given. The 2nd Amendment, among other things, also removed
the maximum number of shares required to be purchased upon notice of a Rapid Purchase, added a limit of
100,000
shares of Common
Stock per individual request, and revised the purchase price of a Rapid Purchase to equal the lowest traded price of Common Stock during
the one hour following White Lion's acceptance of the Rapid Purchase for each request. In addition, White Lion agreed that, on any
single business day, it shall not publicly resell an aggregate amount of Commitment Shares in an amount that exceeds
7
% of the daily
trading volume of the Common Stock for such business day, excluding any trades before or after regular trading hours and any block trades.
In addition, the Company may, from time to time while a purchase notice
is active, issue a Rapid Purchase Notice to White Lion for the purchase of shares (not to exceed
100,000
shares per individual
request) at a purchase price equal to the lowest traded price of Common Stock during the one hour following White Lion's acceptance
of the Rapid Purchase for each request, and which the parties will close on the Rapid Purchase on the trading day the notice of the applicable
Rapid Purchase is given within
two
Business Days of the applicable Rapid Purchase Date. Furthermore, White Lion agreed that, on any single
Business Day, it shall not publicly resell an aggregate amount of Commitment Shares in an amount that exceeds
7
% of the daily trading
volume of our Class A Common Stock for the such preceding Business Day, excluding any trades before or after regular trading hours and
any block trades.
In addition, pursuant
to the Amendment, the Company may, from time to time while a Purchase Notice is active, issue a Rapid Purchase Notice to White Lion which
the parties will close on the Rapid Purchase within
two
Business
Days
of the applicable Rapid Purchase Date. Furthermore, White Lion agreed
that, on any single Business Day, it shall not publicly resell an aggregate amount of Commitment Shares in an amount that exceeds
7
% of
the daily trading volume of the Common Stock for the preceding Business Day.
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During the nine months ended September 30, 2024,
the Company issued
1,000,000
shares under the Common Stock Purchase Agreement for $
1,184,272
in net cash proceeds, including
50,000
shares
related to $
108,485
of cash proceeds not yet received by September 30, 2024.
Registration Rights Agreement (White Lion)
Concurrently with the execution of the Common
Stock Purchase Agreement, the Company entered into the White Lion RRA with the White Lion in which the Company has agreed to register
the shares of common stock purchased by White Lion with the SEC for resale within
30
days of the consummation of a business combination.
The White Lion RRA also contains usual and customary damages provisions for failure to file and failure to have the registration statement
declared effective by the SEC within the time periods specified.
The Common Stock Purchase Agreement and the White
Lion RRA contain customary representations, warranties, conditions and indemnification obligations of the parties. The representations,
warranties and covenants contained in such agreements were made only for purposes of such agreements and as of specific dates, were solely
for the benefit of the parties to such agreements and may be subject to limitations agreed upon by the contracting parties.
NOTE 8 — FAIR VALUE OF FINANCIAL
INSTRUMENTS
The fair value of the Company's assets and
liabilities, which qualify as financial instruments under FASB ASC 820, "Fair Value Measurement", approximates the carrying
amounts represented on the balance sheet.
The Fair value is defined
as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market
participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring
fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities
(Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
●
Level
1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets;
●
Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and
●
Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
In some circumstances,
the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances, the
fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant
to the fair value measurement.
Recurring Basis
Assets and liabilities
measured at fair value on a recurring basis are as follows:
Derivatives
The Company's commodity
price derivatives primarily represent crude oil collar contracts (some with long calls), fixed price swap contracts and differential swap
contracts. The asset and liability measurements for the Company's commodity price derivative contracts are determined using Level
2 inputs. The asset and liability values attributable to the Company's commodity price derivatives were determined based on inputs
that include, but not limited to, the contractual price of the underlying position, current market prices, crude oil forward curves, discount
rates, and volatility factors. The Company had a net derivative asset of $
794,195
as of September 30, 2024 and had a net derivative asset
of $
467,687
as of December 31, 2023.
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Forward Purchase Agreement
The change in fair value of the Forward Purchase
Agreement (both the FPA Put Option liability and Fixed Maturity Consideration) is included in other expense, net in the consolidated statements
of operations and comprehensive loss. The fair value of the FPA was estimated using a Monte-Carlo Simulation in a risk-neutral framework.
Specifically, the future stock price is simulated assuming a Geometric Brownian Motion ("GBM"). For each simulated path, the
forward purchase value is calculated based on the contractual terms and then discounted back to present. Finally, the value of the forward
is calculated as the average present value over all simulated paths. The Maturity Consideration was also valued as part of this model
as the timing of the payment of the Maturity Consideration may be accelerated if the Maturity Date is accelerated. The model also considered
the likelihood of a dilutive offering of common stock.
The following table represents the weighted average
inputs used in calculating the fair value of the prepaid forward contract and the Maturity Consideration as of September 30, 2024 and
December 31, 2023:
September 30,
2024
December 31,
2023
Stock price
$
0.82
$
2.03
Term (in years)
2.13
2.88
Expected volatility
69.9
%
40.7
%
Risk-free interest rate
3.58
%
3.96
%
Expected dividend yield
—
%
—
%
The Company estimated
the likelihood of a Dilutive Offering at a price of $
3.00
per share to be
50
% within nine months of September 30, 2024. The Company estimated
the likelihood of a Dilutive Offering at a price of $
5.00
per share to be
50
% within nine months of December 31, 2023. The FPA estimated
fair value is considered a level 3 fair value measurement.
Warrant Liability
Based on the redemption right present in the warrants
issued in connection with promissory notes, the warrants are accounted for as a liability in accordance with ASC 480 and ASC 815, with
the changes in fair value of the warrants recognize in the statement of operations.
The Company valued the warrants using the trading prices of the Public
Warrants, which mirror the terms of the note payable warrants. The Company also estimated the fair value of the redemption put using a
present value calculation for the time from the Closing Date of the MIPA through the 18-month redemption date and an estimated discount
rate of
15
%. The initial fair value of the warrant liabilities for warrants issued during the period was $
409,834
and was recognized as
debt discount. The estimated fair value of the warrants and redemption put was $
5,672,604
and $
4,777,970
as of September 30, 2024 and
December 31, 2023, respectively, and the Company recognized a change in fair value of the warrant liability of a loss of $
484,799
during
the nine months ended September 30, 2024. The warrant liability estimated fair value is considered a level 3 fair value measurement.
Nonrecurring Basis
The carrying value of
the Company's financial instruments, consisting of cash, accounts receivable, accounts payable and accrued expenses, approximates
their fair value due to the short maturity of such instruments. Financial instruments also consist of debt for which fair value approximates
carrying values as the debt bears interest at fixed or variable rates which are reflective of current rates otherwise available to the
Company. The Company is not exposed to significant interest, currency or credit risks arising from these financial instruments.
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NOTE 9 — RELATED PARTY TRANSACTIONS
On May 5, 2022, the Company entered into a Referral
Fee and Consulting Agreement (the "Consulting Agreement") with Alexandria VMA Capital, LLC ("Alexandria"), an
entity controlled by Mr. Caravaggio, who became the Company's CEO on December 17, 2023. Pursuant to the Consulting Agreement, Alexandria
provided information and contacts with suitable investments and acquisition candidates for the Company's initial business combination.
In addition, Alexandria provided due diligence, purchasing and negotiating strategy advice, organizational and operational advice, and
such other services as requested by the Company. In consideration of the services provided by Alexandria, the Company paid to Alexander
Capital a referral fee of $
1,800,000
equal to
2
% of the total value of the Company's business combination, with half being paid
by the issuance of
89,000
shares of the Company's Class A Common Stock during the period from November 15, 2023 to December 31,
2023 for the Successor. No gain was recognized on the issuance of these shares for the difference in the fair value of the shares and
the $
900,000
payable due to the related party nature of the transaction. The remaining $
900,000
was reflected as accounts payable. As
of September 30, 2024 and December 31, 2023, the Company owes $
568,000
and $
762,000
of the fee.
On January 20, 2023, January 27, 2023, and February
14, 2023, Mr. Caravaggio entered into Private Notes Payable with the Company. Pursuant to the Private Notes Payable, Mr. Caravaggio paid
an aggregate amount of $
179,000
and received promissory notes in the aggregate principal amount of $
179,000
, accruing interest at a rate
of
15
% per annum, and common stock warrants to purchase an aggregate of
179,000
shares of Class A Common Stock of the Company at an exercise
price of $
11.50
per share. The warrants issued to Mr. Caravaggio are identical to the Public Warrants that are publicly traded on the
NYSE American under the symbol "HNRAQ" in all material respects, except that the warrants were not transferable, assignable
or salable until 30 days after the Company's initial business combination. The warrants are exercisable on the same basis as the
Public Warrants.
On February 14, 2023, the Company entered into
a consulting agreement with Donald Orr, the Company's former President, which became effective upon the closing of the MIPA for
a term of three years. Under the agreement, the Company will pay Mr. Orr an initial cash amount of $
25,000
, an initial award of
30,000
shares of common stock, a monthly payment of $
8,000
for the first year of the agreement and $
12,000
per month for the remaining two years,
and two grants, each consisting of restricted stock units ("RSUs") calculated by dividing $
150,000
by the stock price on the
one year and two year anniversary of the initial Business Combination. Each of the RSU awards will vest upon the one year and two-year
anniversary of the grants. In the event of termination of Mr. Orr without cause, Mr. Orr will be entitled to 12 months of the monthly
payment in effect at that time, and the RSU awards issued to Mr. Orr shall fully vest. The
30,000
RSU's were approved by the Board
and issued in March of 2024.
On February 15, 2023, the Company entered into
a consulting agreement with Rhône Merchant House, Ltd. ("RMH Ltd"), a company control by the Company's former
Chairman and CEO Donald H. Goree, which became effective upon the closing of the MIPA for a term of three years. Under the agreement,
the Company will pay to RMH Ltd an initial cash amount of $
50,000
, an initial award of
60,000
shares of common stock, a monthly payment
of $
22,000
, and two grants, each consisting of RSUs calculated by dividing $
250,000
by the stock price on the one year and two-year anniversary
of the initial Business Combination. Each of the RSU awards will vest upon the one year and two-year anniversary of the grants. In the
event of termination of RMH Ltd. without cause, RMH Ltd. will be entitled to $
264,000
, and the RSU awards issued to RMH Ltd. shall fully
vest. The
60,000
RSU's were approved by the Board of Directors and issued in March of 2024.
Effective May 6, 2024, the Company and RMH Ltd.
entered into a settlement and mutual release agreement pursuant to which the Company paid $
100,000
in cash, with $
50,000
paid
on or before execution and the remaining $
50,000
by July 24, 2024. The Company also agreed to issue
150,000
shares of Class
A Common Stock subject to a contractual lockup as final consideration under the Consulting Agreement, which was deemed terminated effective
May 6, 2024. RMH Ltd's
60,000
RSU's were forfeited as part of the agreement. The Company recognized $
360,000
of stock-based
compensation expense related to the Class A Common Shares.
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64
Predecessor
In December of 2022,
the Predecessor entered into a related party promissory note receivable agreement with an entity controlled by owners of the Company in
an amount of $
4,000,000
. The loan bore interest at a rate equal to that of the rate that the Company pays to borrow funds for its own
account plus
0.5
%. The loan was retired at the Closing Date by the Sellers.
NOTE 10 — COMMITMENTS AND CONTINGENCIES
Contingencies
The Company is a party to various legal actions
arising in the ordinary course of its businesses. In accordance with ASC 450, Contingencies, the Company accrues reserves for outstanding
lawsuits, claims and proceedings when a loss contingency is probable and can be reasonably estimated. The Company estimates the amount
of loss contingencies using current available information from legal proceedings, advice from legal counsel and available insurance coverage.
Due to the inherent subjectivity of the assessments and unpredictability of the outcomes of the legal proceedings, any amounts accrued
or included in this aggregate amount may not represent the ultimate loss to the Company from the legal proceedings in question. Thus,
the Company's exposure and ultimate losses may be higher, and possibly significantly more, than the amounts accrued.
Environmental
From time to time, and in the ordinary course
of business, the Company may be subject to certain environmental liabilities. Environmental expenditures that relate to an existing condition
caused by past operations and have no future economic benefits are expensed. Environmental expenditures that extend the life of the related
property or mitigate or prevent future environmental contamination are capitalized. Liabilities for expenditures that will not qualify
for capitalization are recorded when environmental assessment and/or remediation is probable, and the costs can be reasonably estimated.
Such liabilities are undiscounted unless the timing of cash payments for the liability is fixed or reliably determinable. Environmental
liabilities normally involve estimates that are subject to revision until settlement or remediation occurs.
As of September 30, 2024 and December 31, 2023, the Company had recorded
an environmental remediation liability of $
675,000
relating to an oil spill at one of the Company's producing sites in fiscal year
2017 which is recorded in other liabilities in the consolidated balance sheets. The producing site was subsequently sold in 2019 and the
Predecessor indemnified the purchaser for the remediation costs. Management based the remediation liability on the undiscounted cost received
from third- party quotes to remediate the spill. As of June 30, 2024, the Company does not believe it is likely remediation will be required
in the next five years.
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NOTE 11 — SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions
that occurred after the balance sheet date up to the date that the consolidated financial statements were issued.
On October 3, 2024, Pogo Royalty Exchanged
879,675
OpCo Class B Units for
1,379,675
shares of Class A Common Stock. As a result, there are
500,000
remaining Class B Common shares outstanding
as of this filing.
Subsequent to September 30, 2024, the Company
has issued
4,000,000
shares pursuant to the Common Stock Purchase Agreement for net proceeds of $
4,575,714
. The Company also issued the
27,963
shares to officers related to their pledged shares discussed in Note 7.
Subsequent to September 30, 2024, the Company
has issued
260,000
Class A Common shares to settle outstanding accrued payables of $
260,000
and recognized a loss of approximately $
76,000
for the difference in the fair value of the shares issued and the payables balance.
On October 18, 2024, the Company entered into
a consulting agreement with a third party for financing services on a month to month basis.  As compensation for services the Company
will pay the consultant a fee of $
20,000
per month consisting of $
5,000
in cash and $
15,000
in Class A common shares based on the average
closing price for the last
five
trading
days
of the prior calendar month. To date the consultant has earned
43,800
shares under the agreement
that are not yet issued
On October 18, 2024, the Company issued warrants
to purchase
1,200,000
shares of Class A Common shares at an exercise price of $
0.75
for a period of
two year
, to a third party service
provider for services provided to the Company.
On November 15, 2024, the Company entered into
a Confidential Rescission, Settlement, and Release Agreement with the FPA Seller whereby the parties mutually agreed to rescind the Forward
Purchase Agreement and related agreements between the parties, which a-s a result, any transactions, notices or other obligations thereunder
are void
ab initio
. The parties also agreed to release each other of all claims related to the Forward Purchase Agreement, and
in exchange for such release, the Company agreed to issue to the FPA Seller
450,000
restricted Class A Common shares.
On November 21, 2024, the Company and White Lion
entered into
On December 5, 2024, the Company entered into
a merchant cash advance agreement with a third party. The Company borrowed $
350,000
and received $
330,700
in cash proceeds. The Company
will repay an aggregate of $
497,000
on a weekly basis through March 2025.
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66
Up to 5,079,050 Shares of Class A Common Stock
EON
RESOURCES INC.
CLASS A COMMON STOCK
PROSPECTUS
, 2025
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
The following table sets forth
the expenses expected to be incurred by us in connection with the issuance and distribution of the Class A Common Stock registered hereby,
all of which expenses, except for the Securities and Exchange Commission registration fee, are estimates:
Description
Amount
Securities and Exchange Commission registration fee
$
775
Accounting fees and expenses
$
7,000
*
Legal fees and expenses
$
30,000
*
Miscellaneous fees and expenses
$
--
Total
$
37,775
*
Estimated
Item 14. Indemnification of Directors and Officers.
The Second A&R Charter
provides that all of our directors, officers, employees and agents shall be entitled to be indemnified by us to the fullest extent permitted
by Section 145 of the DGCL. Section 145 of the DGCL concerning indemnification of officers, directors, employees and agents
is set forth below.
Section 145. Indemnification of officers,
directors, employees and agents; insurance.
(a)
A corporation shall have power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with such action, suit or proceeding if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the person's conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that the person's conduct was unlawful.
(b)
A corporation shall have power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys' fees) actually and reasonably incurred by the person in connection with the defense or settlement of such action or suit if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper.
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(c)
To the extent that a present or former director or officer of a corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in subsections (a) and (b) of this section, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by such person in connection therewith.
(d)
Any indemnification under subsections (a) and (b) of this section (unless ordered by a court) shall be made by the corporation only as authorized in the specific case upon a determination that indemnification of the present or former director, officer, employee or agent is proper in the circumstances because the person has met the applicable standard of conduct set forth in subsections (a) and (b) of this section. Such determination shall be made, with respect to a person who is a director or officer at the time of such determination, (1) by a majority vote of the directors who are not parties to such action, suit or proceeding, even though less than a quorum, or (2) by a committee of such directors designated by majority vote of such directors, even though less than a quorum, or (3) if there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion, or (4) by the stockholders.
(e)
Expenses (including attorneys' fees) incurred by an officer or director in defending any civil, criminal, administrative or investigative action, suit or proceeding may be paid by the corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified by the corporation as authorized in this section. Such expenses (including attorneys' fees) incurred by former officers and directors or other employees and agents may be so paid upon such terms and conditions, if any, as the corporation deems appropriate.
(f)
The indemnification and advancement of expenses provided by, or granted pursuant to, the other subsections of this section shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in such person's official capacity and as to action in another capacity while holding such office. A right to indemnification or to advancement of expenses arising under a provision of the certificate of incorporation or a bylaw shall not be eliminated or impaired by an amendment to such provision after the occurrence of the act or omission that is the subject of the civil, criminal, administrative or investigative action, suit or proceeding for which indemnification or advancement of expenses is sought, unless the provision in effect at the time of such act or omission explicitly authorizes such elimination or impairment after such action or omission has occurred.
(g)
A corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person's status as such, whether or not the corporation would have the power to indemnify such person against such liability under this section.
(h)
For purposes of this section, references to "the corporation" shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under this section with respect to the resulting or surviving corporation as such person would have with respect to such constituent corporation if its separate existence had continued.
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(i)
For purposes of this section, references to "other enterprises" shall include employee benefit plans; references to "fines" shall include any excise taxes assessed on a person with respect to any employee benefit plan; and references to "serving at the request of the corporation" shall include any service as a director, officer, employee or agent of the corporation which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner such person reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner "not opposed to the best interests of the corporation" as referred to in this section.
(j)
The indemnification and advancement of expenses provided by, or granted pursuant to, this section shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.
(k)
The Court of Chancery is hereby vested with exclusive jurisdiction to hear and determine all actions for advancement of expenses or indemnification brought under this section or under any bylaw, agreement, vote of stockholders or disinterested directors, or otherwise. The Court of Chancery may summarily determine a corporation's obligation to advance expenses (including attorneys' fees).
Insofar as indemnification
for liabilities arising under the Securities Act may be permitted to our directors, officers, and controlling persons pursuant to the
foregoing provisions, or otherwise, we have been advised that, in the opinion of the SEC, such indemnification is against public policy
as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities
(other than the payment of expenses incurred or paid by a director, officer or controlling person in a successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we
will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to the court of appropriate jurisdiction
the question whether such indemnification by us is against public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.
In accordance with Section 102(b)(7)
of the DGCL, the Second A&R Charter provides that no director shall be personally liable to us or any of our stockholders for monetary
damages resulting from breaches of their fiduciary duty as directors, except to the extent such limitation on or exemption from liability
is not permitted under the DGCL. The effect of this provision of the Second A&R Charter is to eliminate our rights and those of our
stockholders (through stockholders' derivative suits on our behalf) to recover monetary damages against a director for breach of
the fiduciary duty of care as a director, including breaches resulting from negligent or grossly negligent behavior, except, as restricted
by Section 102(b)(7) of the DGCL. However, this provision does not limit or eliminate our rights or the rights of any stockholder
to seek nonmonetary relief, such as an injunction or rescission, in the event of a breach of a director's duty of care.
If the DGCL is amended to
authorize corporate action further eliminating or limiting the liability of directors, then, in accordance with the Second A&R Charter,
the liability of our directors to us or our stockholders will be eliminated or limited to the fullest extent authorized by the DGCL, as
so amended. Any repeal or amendment of provisions of the Second A&R Charter limiting or eliminating the liability of directors, whether
by our stockholders or by changes in law, or the adoption of any other provisions inconsistent therewith, will (unless otherwise required
by law) be prospective only, except to the extent such amendment or change in law permits us to further limit or eliminate the liability
of directors on a retroactive basis.
The Second A&R Charter
also provides that we will, to the fullest extent authorized or permitted by applicable law, indemnify our current and former officers
and directors, as well as those persons who, while directors or officers of our corporation, are or were serving as directors, officers,
employees or agents of another entity, trust or other enterprise, including service with respect to an employee benefit plan, in connection
with any threatened, pending or completed proceeding, whether civil, criminal, administrative or investigative, against all expense, liability
and loss (including, without limitation, attorneys' fees, judgments, fines, ERISA excise taxes and penalties and amounts paid in
settlement) reasonably incurred or suffered by any such person in connection with any such proceeding. Notwithstanding the foregoing,
a person eligible for indemnification pursuant to the Second A&R Charter will be indemnified by us in connection with a proceeding
initiated by such person only if such proceeding was authorized by our board of directors, except for proceedings to enforce rights to
indemnification.
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The right to indemnification
which is conferred by the Second A&R Charter is a contract right that includes the right to be paid by us the expenses incurred in
defending or otherwise participating in any proceeding referenced above in advance of its final disposition, provided, however, that if
the DGCL requires, an advancement of expenses incurred by our officer or director (solely in the capacity as an officer or director of
our corporation) will be made only upon delivery to us of an undertaking, by or on behalf of such officer or director, to repay all amounts
so advanced if it is ultimately determined that such person is not entitled to be indemnified for such expenses under the Second A&R
Charter or otherwise.
The rights to indemnification
and advancement of expenses will not be deemed exclusive of any other rights which any person covered by the Second A&R Charter may
have or hereafter acquire under law, the Second A&R Charter, our bylaws, an agreement, vote of stockholders or disinterested directors,
or otherwise.
Any repeal or amendment of
provisions of the Second A&R Charter affecting indemnification rights, whether by our stockholders or by changes in law, or the adoption
of any other provisions inconsistent therewith, will (unless otherwise required by law) be prospective only, except to the extent such
amendment or change in law permits us to provide broader indemnification rights on a retroactive basis, and will not in any way diminish
or adversely affect any right or protection existing at the time of such repeal or amendment or adoption of such inconsistent provision
with respect to any act or omission occurring prior to such repeal or amendment or adoption of such inconsistent provision. The Second
A&R Charter also permits us, to the extent and in the manner authorized or permitted by law, to indemnify and to advance expenses
to persons other that those specifically covered by the Second A&R Charter.
Our bylaws include the provisions
relating to advancement of expenses and indemnification rights consistent with those which are set forth in the Second A&R Charter.
In addition, our bylaws provide for a right of indemnity to bring a suit in the event a claim for indemnification or advancement of expenses
is not paid in full by us within a specified period of time. Our bylaws also permit us to purchase and maintain insurance, at our expense,
to protect us and/or any director, officer, employee or agent of our corporation or another entity, trust or other enterprise against
any expense, liability or loss, whether or not we would have the power to indemnify such person against such expense, liability or loss
under the DGCL.
Any repeal or amendment of
provisions of our bylaws affecting indemnification rights, whether by our board of directors, stockholders or by changes in applicable
law, or the adoption of any other provisions inconsistent therewith, will (unless otherwise required by law) be prospective only, except
to the extent such amendment or change in law permits us to provide broader indemnification rights on a retroactive basis, and will not
in any way diminish or adversely affect any right or protection existing thereunder with respect to any act or omission occurring prior
to such repeal or amendment or adoption of such inconsistent provision.
We have entered into indemnification
agreements with each of our officers and directors a form of which is filed as Exhibit 10.21 to this registration statement. These agreements
require us to indemnify these individuals to the fullest extent permitted under Delaware law against liabilities that may arise by reason
of their service to us, and to advance expenses incurred as a result of any proceeding against them as to which they could be indemnified.
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Item 15.
Recent Sales of Unregistered Securities
Set forth below is information
regarding securities sold and issued by us in the past three years that were not registered under the Securities Act, as well as the consideration
received by us for such securities and information relating to the section of the Securities Act, or rule of the Securities and Exchange
Commission, under which exemption from registration was claimed.
In January 2023, we issued
50,000 warrants to a third-party having terms substantially similar to the Private Placement Warrants in connection with the receipt of
$50,000 in cash and the issuance of a promissory note.
In January 2023, we issued
10,000 warrants to a third-party having terms substantially similar to the Private Placement Warrants in connection with the receipt of
$10,000 in cash and the issuance of a promissory note.
In January 2023, we issued
75,000 warrants to a stockholder having terms substantially similar to the Private Placement Warrants in connection with the receipt of
$75,000 in cash and the issuance of a promissory note.
In January 2023, we issued
100,000 warrants to a third-party having terms substantially similar to the Private Placement Warrants in connection with the receipt
of $100,000 in cash and the issuance of a promissory note.
In January 2023, we issued
100,000 warrants to a stockholder having terms substantially similar to the Private Placement Warrants in connection with the receipt
of $100,000 in cash and the issuance of a promissory note.
In January 2023, we issued
50,000 warrants to a director nominee having terms substantially similar to the Private Placement Warrants in connection with the receipt
of $50,000 in cash and the issuance of a promissory note.
In February 2023, we issued
700,000 warrants to a stockholder controlled by a director having terms substantially similar to the Private Placement Warrants in connection
with the receipt of $700,000 in cash and the issuance of a promissory note.
In February 2023, we issued
179,000 warrants to a stockholder having terms substantially similar to the Private Placement Warrants in connection with the receipt
of $179,000 in cash and the issuance of a promissory note.
In March 2023, we issued 33,000
warrants to a stockholder controlled by a director having terms substantially similar to the Private Placement Warrants in connection
with the receipt of $33,000 in cash and the issuance of a promissory note.
In April 2023, we issued 67,000
warrants to a stockholder controlled by a director having terms substantially similar to the Private Placement Warrants in connection
with the receipt of $67,000 in cash and the issuance of a promissory note.
In April 2023, we issued 50,000
warrants to a third-party having terms substantially similar to the Private Placement Warrants in connection with the receipt of $50,000
in cash and the issuance of a promissory note.
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In May 2023, we issued 50,000
warrants to a stockholder controlled by a director having terms substantially similar to the Private Placement Warrants in connection
with the receipt of $67,000 in cash and the issuance of a promissory note.
In May 2023, we issued 15,000
warrants to a stockholder having terms substantially similar to the Private Placement Warrants in connection with the receipt of $15,000
in cash and the issuance of a promissory note.
In May 2023, we issued 100,000
warrants to a third-party having terms substantially similar to the Private Placement Warrants in connection with the receipt of $100,000
in cash and the issuance of a promissory note.
In May 2023, we issued 250,000
warrants to a third-party having terms substantially similar to the Private Placement Warrants in connection with the receipt of $250,000
in cash and the issuance of a promissory note.
In June 2023, we issued 150,000
warrants to a third-party having terms substantially similar to the Private Placement Warrants in connection with the receipt of $150,000
in cash and the issuance of a promissory note.
In July 2023, we issued 150,000
warrants to a third-party having terms substantially similar to the Private Placement Warrants in connection with the receipt of $150,000
in cash and the issuance of a promissory note.
In July 2023, we issued 50,000
warrants to a third-party having terms substantially similar to the Private Placement Warrants in connection with the receipt of $50,000
in cash and the issuance of a promissory note.
In July 2023, we issued 25,000
warrants to a stockholder having terms substantially similar to the Private Placement Warrants in connection with the receipt of $25,000
in cash and the issuance of a promissory note.
In July 2023, we issued 10,000
warrants to a third-party having terms substantially similar to the Private Placement Warrants in connection with the receipt of $10,000
in cash and the issuance of a promissory note.
In August 2023, we issued
50,000 warrants to a third-party having terms substantially similar to the Private Placement Warrants in connection with the receipt of
$50,000 in cash and the issuance of a promissory note.
In August 2023, we issued
150,000 warrants to a third-party having terms substantially similar to the Private Placement Warrants in connection with the receipt
of $150,000 in cash and the issuance of a promissory note.
In August 2023, we issued
100,000 warrants to a third-party having terms substantially similar to the Private Placement Warrants in connection with the receipt
of $100,000 in cash and the issuance of a promissory note.
In September 2023, we issued
50,000 warrants to a third-party having terms substantially similar to the Private Placement Warrants in connection with the receipt of
$50,000 in cash and the issuance of a promissory note.
In September 2023, we issued
20,000 warrants to a third-party having terms substantially similar to the Private Placement Warrants in connection with the receipt of
$20,000 in cash and the issuance of a promissory note.
In October 2023, we issued
875,000 warrants to a third-party having terms substantially similar to the Private Placement Warrants in connection with the receipt
of $875,000 in cash and the issuance of a promissory note.
In October 2023, we issued
100,000 warrants to a third-party having terms substantially similar to the Private Placement Warrants in connection with the
receipt of $100,000 in cash and the issuance of a promissory note.
In October 2023, we issued
500,000 warrants to a third-party having terms substantially similar to the Private Placement Warrants in connection with the
receipt of $500,000 in cash and the issuance of a promissory note.
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In October 2023, we issued
50,000 warrants to a third-party having terms substantially similar to the Private Placement Warrants in connection with the
receipt of $50,000 in cash and the issuance of a promissory note.
In October 2023, we issued
50,000 warrants to a third-party having terms substantially similar to the Private Placement Warrants in connection with the
receipt of $50,000 in cash and the issuance of a promissory note.
In October 2023, we issued
125,000 warrants to a third-party having terms substantially similar to the Private Placement Warrants in connection with the
receipt of $125,000 in cash and the issuance of a promissory note.
In October 2023, we issued
50,000 warrants to a third-party having terms substantially similar to the Private Placement Warrants in connection with the
receipt of $50,000 in cash and the issuance of a promissory note.
In November 2023, we issued
600,000 warrants to a third-party having terms substantially similar to the Private Placement Warrants in connection with the
receipt of $600,000 in cash and the issuance of a promissory note.
In November 2023, we issued
500,000 warrants to a third-party having terms substantially similar to the Private Placement Warrants in connection with the
receipt of $500,000 in cash and the issuance of a promissory note.
In November 2023, we issued
250,000 warrants to a third-party having terms substantially similar to the Private Placement Warrants in connection with the
receipt of $250,000 in cash and the issuance of a promissory note.
In November 2023, we issued
50,000 warrants to a third-party having terms substantially similar to the Private Placement Warrants in connection with the
receipt of $50,000 in cash and the issuance of a promissory note.
In November 2023, we issued
200,000 warrants to a third-party having terms substantially similar to the Private Placement Warrants in connection with the
receipt of $200,000 in cash and the issuance of a promissory note.
In November 2023, we issued
250,000 warrants to a third-party having terms substantially similar to the Private Placement Warrants in connection with the
receipt of $250,000 in cash and the issuance of a promissory note.
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In November 2023, we entered
agreements with (i) Meteora Capital Partners, LP ("MCP"), (ii) Meteora Select Trading Opportunities Master, LP ("MSTO"),
and (iii) Meteora Strategic Capital, LLC ("MSC" and, collectively with MCP and MSTO, "Meteora"), pursuant
to which Meteora agreed to reverse the redemption of up to the lesser of (i) 600,000 shares of Class A Common Stock, and (ii) such number
of shares of Class A Common Stock such that the number of shares beneficially owned by Meteora and its affiliates and any other persons
whose beneficial ownership of Class A Common Stock would be aggregated with those of Meteora for purposes of Section 13(d) of the Exchange
Act, does not exceed 9.99% of the total number of issued and outstanding shares of Class A Common Stock. In addition, Meteora agreed to
subscribe for and purchase, and we agreed to issue and sell to Meteora, on the Closing Date, shares of Class A Common Stock, less the
number of shares of Class A Common Stock purchased by Meteora separately from third parties through a broker in the open market.
On November 13, 2023, we entered
into exchange agreements ("Exchange Agreements") with certain holders (the "Noteholders") of promissory notes
issued by us for working capital purposes which accrued interest at a rate of 15% per annum (the "Notes"). Pursuant to the
Exchange Agreements, we agreed to exchange, in consideration of the surrender and termination of the Notes in an aggregate principal amount
(including interest accrued thereon) of $2,257,771, for 451,563 shares of Class A Common Stock at a price per share equal to $5.00 per
share.
In connection with a Referral
Fee and Consulting Agreement (the "Consulting Agreement") by and between us and Alexandria VMA Capital, LLC, an entity controlled
by Dante Caravaggio, our Chief Executive Officer, President, and member of our Board of Directors ("Consultant"), we issued
89,000 shares of Class A Common Stock to Consultant in connection with the closing of the Purchase as consideration for services rendered.
In connection with the Closing
of the Purchase, we issued to two employees 10,000 shares of Class A Common Stock each.
Upon the Closing of the Purchase,
we issued 2,000,000 shares of Class B Common Stock, 2,000,000 OpCo Class B Units, and 1,500,000 OpCo Preferred Units to Seller as consideration
for the Purchase. In addition, we issued to the Seller 10,000 shares of Class A Common Stock as consideration for the Option Agreement.
In March 2024, we issued
50,000 warrants to a third-party having terms substantially similar to the private placement warrants in connection with the
receipt of $50,000 in cash and the issuance of a promissory note.
In March 2024, we issued
100,000 warrants to a third-party having terms substantially similar to the private placement warrants in connection with the
receipt of $100,000 in cash and the issuance of a promissory note.
In March 2024, we issued
50,000 warrants to a third-party having terms substantially similar to the private placement warrants in connection with the
receipt of $50,000 in cash and the issuance of a promissory note.
In March 2024, we issued 40,000
RSUs to a director for services. The RSUs vest 1/3 on November 15, 2024, 1/3 on November 15, 2025, and 1/3 on November 15, 2026. We also
issued 37,500 RSUs to such director that vest on November 15, 2024.
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In March 2024, we issued 37,000
RSUs to a director for services. The RSUs vest 1/3 on November 15, 2024, 1/3 on November 15, 2025, and 1/3 on November 15, 2026. We also
issued 37,500 RSUs to such director that vest on November 15, 2024.
In March 2024, we issued 35,000
RSUs to a director for services. The RSUs vest 1/3 on November 15, 2024, 1/3 on November 15, 2025, and 1/3 on November 15, 2026. We also
issued 37,500 RSUs to such director that vest on November 15, 2024.
In March 2024, we issued 50,000
RSUs to our Chief Executive Officer for services. The RSUs vest 1/3 on November 15, 2024, 1/3 on November 15, 2025, and 1/3 on November
15, 2026.
In March 2024, we issued 50,000
RSUs to our Chief Financial Officer for services. The RSUs vest 1/3 on November 15, 2024, 1/3 on November 15, 2025, and 1/3 on November
15, 2026.
In March 2024, we issued 50,000
RSUs to our General Counsel for services. The RSUs vest 1/3 on November 15, 2024, 1/3 on November 15, 2025, and 1/3 on November 15, 2026.
In March 2024, we issued 40,000
RSUs to an officer for services. The RSUs vest 1/3 on November 15, 2024, 1/3 on November 15, 2025, and 1/3 on November 15, 2026.
In March 2024, we issued 35,000
RSUs to an officer for services. The RSUs vest 1/3 on November 15, 2024, 1/3 on November 15, 2025, and 1/3 on November 15, 2026.
In March 2024, we issued 35,000
RSUs to a former officer for services. The RSUs vested on issuance.
In March 2024, we issued 60,000
RSUs to a consultant for services. The RSUs vest on November 15, 2024.
In March 2024, we issued 30,000
RSUs to a consultant for services. The RSUs vest on November 15, 2024.
In March 2024, we issued
100,000 warrants to our Vice President of Finance and Administration having terms substantially similar to the private placement
warrants in connection with the receipt of $100,000 in cash and the issuance of a promissory note.
In April 2024, we issued
100,000 warrants to our Chief Financial Officer having terms substantially similar to the private placement warrants in connection
with the receipt of $100,000 in cash and the issuance of a promissory note.
In May 2024, we issued 100,000
warrants to a stockholder controlled by a director having terms substantially similar to the private placement warrants in connection
with the receipt of $100,000 in cash and the issuance of a promissory note.
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In October 2024, we issued
27,963 shares of Class A Common Stock (the "Pledge Shares") issued to certain Selling Securityholders in connection with their
agreement to pledge equity in favor of First International Bank & Trust ("FIBT").
In October 2024, we issued
75,000 shares of Class A Common Stock in connection with fees owed for consulting services.
In October 2024, we issued
60,000 shares of Class A Common Stock in connection with a separation and release effective December 17, 2023.
In October 2024, we issued
150,000 shares of Class A Common Stock in connection with a settlement and mutual release agreement effective May 6, 2024.
In October 2024, we issued
a warrant to purchase 1,200,000 shares of Class A Common in connection with the forgiveness of certain accounts payable.
In October 2024, we issued
100,000 shares of Class A Common Stock in connection with the forgiveness of $100,000 of accounts payable.
In October 2024, we issued
50,000 shares of Class A Common Stock in connection with the forgiveness of $50,000 of accounts payable.
In October 2024, we issued
30,000 shares of Class A Common Stock in connection with the forgiveness of $30,000 of accounts payable.
In October 2024, we issued
80,000 shares of Class A Common Stock in connection with the forgiveness of $80,000 of accounts payable.
In January 2025, we issued
24,000 shares in connection with the forgiveness of $24,000 of accounts payable.
In January 2025, we issued
24,000 shares in connection with the forgiveness of $45,050 of accounts payable.
In January 2025, we issued
10,000 shares in connection with the provision of targeting and research services.
All issuances described above
were not registered under the Securities Act in reliance upon the exemption provided in Section 3(a)(9) and/or 4(a)(2) of the Securities
Act and/or Regulation D promulgated thereunder.
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Item 16. Exhibits and Financial Statement Schedules.
(a)
Exhibits. The list of exhibits immediately preceding the signature page of this registration statement is incorporated herein by reference.
(b)
Financial Statements. See page F-1 for an index to the financial statements and schedules included in the registration statement.
Item 17.
Undertakings
Insofar as indemnification
for liabilities arising under the Securities Act of 1933, as amended, or the Securities Act, may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication
of such issue.
The undersigned registrant hereby undertakes:
(1)
To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i)
To include any prospectus required by section 10(a)(3) of the Securities Act of 1933;
(ii)
To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement.
(iii)
To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;
(2)
That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(3)
To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(4)
That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser:
(i)
Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and
(ii)
Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information required by section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date.
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(5)
That, for the purpose of determining liability of the registrant under the Securities Act to any purchaser in the initial distribution of the securities: the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
(i)
Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;
(ii)
Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;
(iii)
The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and
(iv)
Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
(6)
Provide to the underwriter at the closing specified in the underwriting agreements certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser.
(7)
For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b) (1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.
(8)
For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
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EXHIBIT INDEX
Exhibit Number
Exhibit Description
2.1
Amended and Restated Membership Interest Purchase Agreement, dated as of August 28, 2023, by and among Buyer, Seller, and Sponsor (filed as Exhibit 2.1 to the Company's Current Report on form 8-K filed on August 30, 2023 and incorporated herein by reference).
2.2
Amendment No. 1 to the Amended and Restated Membership Interest Purchase Agreement, dated November 15, 2023, by and among Buyer, Seller, and Sponsor (filed as Exhibit 2.2 to the Company's Current Report on Form 8-K, filed on November 21, 2023 and incorporated herein by reference).
2.3
Letter Agreement between Buyer and Seller Re: Settle Up between Parties, dated November 15, 2023 (filed as Exhibit 2.3 to the Company's Current Report on Form 8-K filed on November 21, 2023 and incorporated herein by reference).
3.1
Second Amended and Restated Certificate of Incorporation of the Company, filed with the Secretary of State of the State of Delaware (filed as Exhibit 3.1 to the Company's Current Report on Form 8-K filed on November 21, 2023 and incorporated herein by reference).
3.2
Certificate of Amendment to Certificate of Incorporation, as filed with the Secretary of State of the State of Delaware on September 16, 2024 (filed as Exhibit 3.1 to the Company's Current Report on Form 8-K filed on September 18, 2024, and incorporated herein by reference)
3.3
Amended and Restated Bylaws of the Company, effective September 17, 2024 (filed as Exhibit 3.2 to the Company's Current Report on Form 8-K filed on September 18, 2024, and incorporated herein by reference)
3.4
Amendment No. 1 to the Amended and Restated Bylaws of the Company, effective November 26, 2024 (filed as Exhibit 3.1 to the Company's Current Report on Form 8-K filed on November 26, 2024, and incorporated herein by reference)
4.1
Warrant Agreement between Continental Stock Transfer & Trust Company and the Company (filed as Exhibit 4.1 to the Company's Annual Report on Form 10-K filed on April 15, 2022 and incorporated herein by reference).
4.2
Description of Registrant's Securities (filed as Exhibit 4.2 to the Company's Annual Report on Form 10-K filed on May 3, 2024 and incorporated herein by reference).
4.3
Warrant issued by EON Resources Inc. to Pryor Cashman LLP, dated October 18, 2024 (filed as Exhibit 4.1 to the Company's Current Report on Form 8-K filed on October 21, 2024 and incorporated herein by reference).
5.1*
Opinion of Pryor Cashman LLP
10.1
Insider Letter between the Company and each of its executive officers, directors, HNRAC Sponsors LLC and its permitted transferees (incorporated by reference to Exhibit 10.1 to the Annual Report on Form 10-K filed by the Registrant on April 15, 2022).
10.2
Investment Management Trust Agreement between Continental Stock Transfer & Trust Company and the Company (incorporated by reference to Exhibit 10.2 to the Annual Report on Form 10-K filed by the Registrant on April 15, 2022).
10.3
Securities Subscription Agreement (founder shares), dated December 24, 2020, between the Company and HNRAC Sponsors LLC (incorporated by reference to Exhibit 10.4 to the Annual Report on Form 10-K filed by the Registrant on April 15, 2022).
10.4
Unit Subscription Agreement between the Company and HNRAC Sponsors LLC (private placement units) (incorporated by reference to Exhibit 10.5 to the Annual Report on Form 10-K filed by the Registrant on April 15, 2022).
10.5
Administrative Services Agreement by and between the Company and HNRAC Sponsors LLC (incorporated by reference to Exhibit 10.7 to the Annual Report on Form 10-K filed by the Registrant on April 15, 2022).
10.6
Services Agreement, dated April 11, 2022, by and between Company and Houston Natural Resources, Inc. (incorporated by reference to Exhibit 10.8 to the Annual Report on Form 10-K filed by the Registrant on April 15, 2022).
10.7
Form of SPAC Stockholder Support Agreement, dated as of December 27, 2022, by and between the Company and SPAC Stockholder (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by the Registrant on January 3, 2023).
10.8
Common Stock Purchase Agreement, dated as of October 17, 2022, by and between the Company and White Lion Capital LLC (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K as filed by the Registrant on October 21, 2022)
10.9
Registration Rights Agreement, dated as of October 17, 2022, by and between the Company and White Lion Capital LLC (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K as filed by the Registrant on October 21, 2022).
10.10
Amended and Restated Limited Liability Company Agreement of HNRA Upstream, LLC by and among HNRA Upstream, LLC, Pogo Royalty, LLC, and the Company, dated November 15, 2023 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by the Registrant on November 21, 2023).
10.11†
Senior Secured Term Loan Agreement, dated November 15, 2023, by and among First International Bank & Trust, the Company, HNRA Upstream, LLC, HNRA Partner, Inc., Pogo Resources, LLC, and LH Operating, LLC (incorporated by reference to Exhibit 10.8 to the Current Report on Form 8-K filed by the Registrant on November 21, 2023).
10.12
Security Agreement, dated November 15, 2023, by and among First International Bank & Trust, the Company, HNRA Upstream, LLC, HNRA Partner, Inc., Pogo Resources, LLC, and LH Operating, LLC (incorporated by reference to Exhibit 10.9 to the Current Report on Form 8-K filed by the Registrant on November 21, 2023).
10.13
Form of Forward Purchase Agreement (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by the Registrant on November 3, 2023).
10.14
Form of FPA Funding Amount PIPE Subscription Agreement (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed by the Registrant on November 3, 2023).
10.15
Form of Non-Redemption Agreement (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by the Registrant on November 13, 2023).
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10.16
Form of Exchange Agreement (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed by the Registrant on November 13, 2023).
10.17
Form of Indemnification Agreement (incorporated by reference to Exhibit 10.6 to the Registration Statement on Form S-1 filed by the Registrant on December 28, 2021).
10.18
2023 HNR Acquisition Corp Omnibus Incentive Plan (incorporated by reference to Exhibit 10.11 to the Current Report on Form 8-K filed by the Registrant on November 21, 2023).
10.19
Guaranty Agreement, dated as of November 15, 2023 (incorporated by reference to Exhibit 10.10 to the Current Report on Form 8-K filed by the Registrant on November 21, 2023).
10.20
Promissory Note, dated November 15, 2023 (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed by the Registrant on November 21, 2023).
10.21
Registration Rights Agreement, dated November 15, 2023 between the Registrant and certain security holders (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K filed by the Registrant on November 21, 2023).
10.22
Option Agreement, dated as of November 15, 2023 (incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K filed by the Registrant on November 21, 2023).
10.23
Director Nomination and Board Observer Agreement, dated as of November 15, 2023, by and between the Company and CIC Pogo LP, (incorporated by reference to Exhibit 10.5 to the Current Report on Form 8-K filed by the Registrant on November 21, 2023).
10.24
Backstop Agreement, dated as of November 15, 2023 (incorporated by reference to Exhibit 10.6 to the Current Report on Form 8-K filed by the Registrant on November 21, 2023).
10.25
Founder Pledge Agreement, dated as of November 15, 2023 (incorporated by reference to Exhibit 10.7 to the Current Report on Form 8-K filed by the Registrant on November 21, 2023).
10.26
Satisfaction and Discharge of Indebtedness pursuant to Underwriting Agreement, dated September 7, 2023, by and between the Company and EF Hutton, a division of Benchmark Investments, LLC (incorporated by reference to Exhibit 1.1 to the Current Report on Form 8-K filed by the Registrant on September 13, 2023).
10.27
Executive Employment Agreement, dated January 29, 2024, by and between the Company and Mark Williams (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by the Registrant on February 1, 2024).
10.28
Separation and Release Agreement, dated December 17, 2023, by and between the Company and Diego Rojas (incorporated by reference to Exhibit 10.1 on the Current Report on Form 8-K filed by the Registrant on December 20, 2023).
10.29
Executive Employment Agreement, dated December 18, 2023, by and between the Company and Dante Caravaggio (incorporated by reference to Exhibit 10.2 on the Current Report on Form 8-K filed by the Registrant on December 20, 2023).
10.30
Amendment No.1 to the Common Stock Purchase Agreement, dated March 7, 2024, by and between the Company and White Lion Capital, LLC (incorporated by reference to Exhibit 10.1 on the Current Report on Form 8-K filed by the Registrant on March 7, 2024).
10.31
Employment Agreement, dated December 13, 2023, by and between the Company and Mitchell B. Trotter (incorporated by reference to Exhibit 10.31 to the Company's Registrant Statement on Form S-1/A filed on August 5, 2024).
10.32
Employment Agreement, dated December 13, 2023, by and between the Company and David M. Smith  (incorporated by reference to Exhibit 10.32 to the Company's Registrant Statement on Form S-1/A filed on August 5, 2024).
10.33
Amendment No. 2 to Common Stock Purchase Agreement between the Company and White Lion Capital LLC, dated June 17, 2024 (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed by the Registrant on June 20, 2024).
16.1
Auditor Letter (incorporated by reference to Exhibit 16.1 to the Annual Report on Form 10-K filed by the Registrant on April 15, 2022).
23.1*
Consent of Marcum LLP regarding financial statements of EON Resources Inc.
23.2*
Consent of Pryor Cashman LLP (included on Exhibit 5.1)
23.3*
Consent of William M. Cobb & Associates, Inc.
99.1
Report of William M. Cobb & Associates, Inc. as of December 31, 2022 (LH Operating, LLC), updated June 30, 2023, which excludes the 10% overriding royalty interest not acquired in the amended transaction (incorporated by reference to Annex E to the Company's Definitive Proxy Statement on Schedule 14A as filed with the SEC on October 13, 2023).
99.2
Report of William M. Cobb & Associates, Inc, as of December 31, 2022 (LH Operating, LLC), updated June 30, 2023, which includes the 10% overriding royalty interest not acquired in the amended transaction (incorporated by reference to Annex G to the Company's Definitive Proxy Statement on Schedule 14A as filed with the SEC on October 13, 2023).
99.3
Report of William M. Cobb & Associates, Inc, as of December 31, 2023 (LH Operating, LLC), which excludes the 10% overriding royalty interest not acquired in the amended transaction (incorporated by reference to Exhibit 99.1 to the Annual Report on Form 10-K filed by the Registrant on May 3, 2024).
101.INS
Inline XBRL Instance Document
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.SCH
Inline XBRL Taxonomy Extension Schema Document
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB
Inline XBRL Taxonomy Extension Labels Linkbase Document
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
107*
Filing Fee Table
*
Filed
herewith.
**
Previously
filed.
†
Schedules
and exhibits to this Exhibit omitted pursuant to Regulation S-K Item 601(b)(2). The Company agrees to furnish supplementally a copy of
any omitted schedule or exhibit to the SEC upon request.
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SIGNATURES
In accordance with the requirements of the Securities Act of 1933,
the Registrant certifies that it has reasonable grounds to believe that it met all the requirements of filing on Form S-1 and authorized
this Registration Statement to be signed on its behalf by the undersigned, in Houston, Texas, on January 23, 2025.
EON RESOURCES INC.
By:
/s/ Mitchell B. Trotter
Mitchell B. Trotter
Chief Financial Officer
In accordance with the requirements
of the Securities Act of 1933, this Registration Statement was signed by the following persons in the capacities and on the dates stated.
Signature
Title
Date
/s/
Dante Caravaggio
Chief Executive Officer, President and Director
January 23, 2025
Dante Caravaggio
(
Principal Executive Officer)
/s/
Mitchell B. Trotter
Chief Financial Officer and Director
January 23, 2025
Mitchell B. Trotter
(
Principal Financial and Accounting Officer)
/s/
Byron Blount
Director
January 23, 2025
Byron Blount
/s/
Joseph V. Salvucci, Sr.
Director
January 23, 2025
Joseph V. Salvucci, Sr.
/s/ Joseph V. Salvucci, Jr.
Director
January 23, 2025
Joseph V. Salvucci, Jr.
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