Document And Entity Information
Document And Entity Information | 12 Months Ended |
Dec. 31, 2023 | |
Document Information Line Items | |
Entity Registrant Name | HNR Acquisition Corp |
Document Type | S-1/A |
Amendment Flag | true |
Amendment Description | Amendment No. 2 |
Entity Central Index Key | 0001842556 |
Entity Filer Category | Non-accelerated Filer |
Entity Small Business | true |
Entity Emerging Growth Company | true |
Entity Ex Transition Period | false |
Entity Incorporation, State or Country Code | DE |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
ASSETS | ||
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 |
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 | ||
Additional paid-in capital | 16,317,856 | |
Owners’ equity | 28,504,247 | |
Accumulated deficit | (19,118,745) | |
Total stockholders’ (deficit) equity attributable to HNR Acquisition Corp. | (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 |
Class A Common Stock | ||
Stockholders’ equity | ||
Common stock value | 524 | |
Class B Common Stock | ||
Stockholders’ equity | ||
Common stock value | $ 180 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parentheticals) - $ / shares | Dec. 31, 2023 | Dec. 31, 2022 |
Preferred stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Class A Common Stock | ||
Common stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 5,235,131 | 5,235,131 |
Common stock, shares outstanding | 5,235,131 | 5,235,131 |
Class B Common Stock | ||
Common stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 20,000,000 | 20,000,000 |
Common stock, shares issued | 1,800,000 | 1,800,000 |
Common stock, shares outstanding | 1,800,000 | 1,800,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 2 Months Ended | 10 Months Ended | 12 Months Ended |
Dec. 31, 2023 | Nov. 14, 2023 | Dec. 31, 2022 | |
Revenues | |||
Gain (loss) on derivative instruments, net | $ 51,957 | $ (4,793,790) | |
Other revenue | 520,451 | 255,952 | |
Total revenues | 24,238,482 | 35,403,940 | |
Expenses | |||
Production taxes, transportation and processing | 2,117,800 | 3,484,477 | |
Lease operating | 8,692,752 | 8,418,739 | |
Depletion, depreciation and amortization | 1,497,749 | 1,613,402 | |
Accretion of asset retirement obligations | 848,040 | 1,575,296 | |
General and administrative | 3,700,267 | 2,953,202 | |
Acquisition costs | |||
Total expenses | 16,856,608 | 18,045,116 | |
Operating income (loss) | 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 | |||
Change in fair value of forward purchase agreement liability | |||
Amortization of debt discount | |||
Interest expense | (1,834,208) | (1,076,060) | |
Interest income | 313,401 | ||
Insurance policy recovery | 2,000,000 | ||
Other Income (expense) | (74,193) | 13,238 | |
Total other income (expenses) | (2,411,011) | 937,178 | |
Income (loss) before income taxes | 4,970,863 | 18,296,002 | |
Income tax provision | |||
Net income (loss) | 4,970,863 | 18,296,002 | |
Net income (loss) attributable to noncontrolling interests | |||
Net income (loss) attributable to HNR Acquisition Corp. | $ 4,970,863 | $ 18,296,002 | |
Weighted average share outstanding, common stock - basic and diluted (in Shares) | |||
Net income (loss) per share of common stock – basic and diluted (in Dollars per share) | |||
Crude Oil | |||
Revenues | |||
Revenues | $ 22,856,521 | $ 37,982,367 | |
Natural Gas and Natural Gas Liquids | |||
Revenues | |||
Revenues | $ 809,553 | $ 1,959,411 | |
Successor | |||
Revenues | |||
Gain (loss) on derivative instruments, net | $ 340,808 | ||
Other revenue | 50,738 | ||
Total revenues | 2,975,661 | ||
Expenses | |||
Production taxes, transportation and processing | 226,062 | ||
Lease operating | 1,453,367 | ||
Depletion, depreciation and amortization | 352,127 | ||
Accretion of asset retirement obligations | 11,062 | ||
General and administrative | 3,553,117 | ||
Acquisition costs | 9,999,860 | ||
Total expenses | 15,595,595 | ||
Operating income (loss) | (12,619,934) | ||
Other Income (expenses) | |||
Net loss on asset sales and impairment | |||
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) | ||
Interest income | 6,736 | ||
Insurance policy recovery | |||
Other Income (expense) | 2,937 | ||
Total other income (expenses) | 1,231,093 | ||
Income (loss) before income taxes | (11,388,841) | ||
Income tax provision | 2,387,639 | ||
Net income (loss) | (9,001,202) | ||
Net income (loss) attributable to noncontrolling interests | |||
Net income (loss) attributable to HNR Acquisition Corp. | $ (9,001,202) | ||
Weighted average share outstanding, common stock - basic and diluted (in Shares) | 5,235,131 | ||
Net income (loss) per share of common stock – basic and diluted (in Dollars per share) | $ (1.72) | ||
Successor | Crude Oil | |||
Revenues | |||
Revenues | $ 2,513,197 | ||
Successor | Natural Gas and Natural Gas Liquids | |||
Revenues | |||
Revenues | $ 70,918 |
Consolidated Statements of Op_2
Consolidated Statements of Operations (Parentheticals) - $ / shares | 2 Months Ended | 10 Months Ended | 12 Months Ended |
Dec. 31, 2023 | Nov. 14, 2023 | Dec. 31, 2022 | |
Weighted average shares outstanding - diluted | |||
Net income (loss) per share – diluted | |||
Successor | |||
Weighted average shares outstanding - diluted | 5,235,131 | ||
Net income (loss) per share – diluted | $ (1.72) |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders’ Equity (Deficit) - Successor - USD ($) | Class A Common Stock | Class B Common Stock | Owner’s Equity | Non-redeemable | Additional Paid-In Capital | Accumulated Deficit | Total Stockholders’ (Deficit) Equity Attributable to HNR Acquisition Corp. | Noncontrolling Interest | Total |
Balance at Dec. 31, 2021 | $ 12,201,851 | ||||||||
Net Income (loss) | 18,296,002 | ||||||||
Equity-based compensation | 6,394 | ||||||||
Distributions | (2,000,000) | ||||||||
Balance at Dec. 31, 2022 | 28,504,247 | ||||||||
Net Income (loss) | 4,970,863 | ||||||||
Balance at Nov. 14, 2023 | $ 33,475,110 | $ 346 | $ (9,719,485) | $ (10,079,371) | $ (19,798,510) | $ (19,798,510) | |||
Balance (in Shares) at Nov. 14, 2023 | 3,457,813 | ||||||||
Reclassification of shares under two class structure and non-redemptions | $ 346 | $ (346) | |||||||
Reclassification of shares under two class structure and non-redemptions (in Shares) | 3,457,813 | (3,457,813) | |||||||
Excise tax imposed on common stock redemptions | (38,172) | (38,172) | (38,172) | ||||||
Reclassification of Public Shares Not Redeemed | $ 45 | 4,878,030 | 4,878,075 | 4,878,075 | |||||
Reclassification of Public Shares Not Redeemed (in Shares) | 445,626 | ||||||||
Non redemption Agreement | $ 60 | 6,567,879 | 6,567,939 | 6,567,939 | |||||
Non redemption Agreement (in Shares) | 600,000 | ||||||||
Shares not redeemer under Forward Purchase Agreement | $ 14 | 1,533,272 | 1,533,286 | 1,533,286 | |||||
Shares not redeemer under Forward Purchase Agreement (in Shares) | 140,070 | ||||||||
Forward purchase agreement prepayment | 8,190,554 | 8,190,554 | 8,190,554 | ||||||
Share-based compensation | $ 38 | 3,445,927 | 3,445,965 | 3,445,965 | |||||
Share-based compensation (in Shares) | 381,622 | ||||||||
Shares issued for Acquisition | $ 21 | $ 180 | 1,421,679 | 1,421,880 | 33,406,414 | 34,828,294 | |||
Shares issued for Acquisition (in Shares) | 210,000 | 1,800,000 | |||||||
Net Income (loss) | (9,001,202) | (9,001,202) | (9,001,202) | ||||||
Balance at Dec. 31, 2023 | $ 524 | $ 180 | $ 16,317,856 | $ (19,118,745) | $ (2,800,185) | $ 33,406,414 | $ 30,606,229 | ||
Balance (in Shares) at Dec. 31, 2023 | 5,235,131 | 1,800,000 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 2 Months Ended | 10 Months Ended | 12 Months Ended |
Dec. 31, 2023 | Nov. 14, 2023 | Dec. 31, 2022 | |
Operating activities: | |||
Net income | $ 4,970,863 | $ 18,296,002 | |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation, depletion, and amortization expense | 1,497,749 | 1,613,402 | |
Accretion of asset retirement obligations | 843,865 | 1,575,296 | |
Equity-based compensation | 6,394 | ||
Deferred income tax benefit | |||
Amortization of operating lease right-of-use assets | (403) | (329) | |
Amortization of debt issuance costs | 3,890 | 3,676 | |
Change in fair value of unsettled derivatives | (1,215,693) | (2,185,000) | |
Change in fair value of warrant liability | |||
Change in fair value of forward purchase agreement | |||
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 | (921,945) | (243,940) | |
Prepaid expenses and other assets | 26,833 | (132,809) | |
Related party note receivable interest income | (313,401) | ||
Accounts payable and accrued liabilities | 1,480,138 | 148,143 | |
Accrued liabilities | 753,595 | 1,707,701 | |
Royalties payable | 157,991 | 10,248 | |
Royalties payable – related party | 8,066 | (2,147,652) | |
Net cash provided by operating activities | 8,190,563 | 18,651,132 | |
Investing activities: | |||
Development of crude oil and gas properties | (6,769,557) | (16,891,856) | |
Acquisition of business, net of cash acquired | |||
Trust Account withdrawals | |||
Issuance of related party note receivable | (190,998) | (3,809,003) | |
Net cash provided by (used in) investing activities | (6,960,555) | (20,700,859) | |
Financing activities: | |||
Proceeds from issuance of long-term debt | 8,000,000 | ||
Payment of debt issuance costs | (3,000,000) | ||
Repayments of long-term debt | (3,000,000) | ||
Member distributions | (2,000,000) | ||
Repayment of related party notes payable | |||
Redemptions of common stock | |||
Net cash provided by (used in) financing activities | (3,000,000) | 3,000,000 | |
Net change in cash and cash equivalents | (1,769,992) | 950,273 | |
Cash and cash equivalents at beginning of period | $ 246,323 | 2,016,315 | 1,066,042 |
Cash and cash equivalents at end of period | 246,323 | 2,016,315 | |
Cash paid during the period for: | |||
Interest on debt | 2,002,067 | 847,968 | |
Income taxes | |||
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 | 256,237 | $ 663,954 | |
Successor | |||
Operating activities: | |||
Net income | (9,001,202) | ||
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation, depletion, and amortization expense | 352,127 | ||
Accretion of asset retirement obligations | 11,062 | ||
Equity-based compensation | 3,445,965 | ||
Deferred income tax benefit | (2,365,632) | ||
Amortization of operating lease right-of-use assets | |||
Amortization of debt issuance costs | 1,191,553 | ||
Change in fair value of unsettled derivatives | (443,349) | ||
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 | |||
(Gain) loss on sale of assets | |||
Changes in operating assets and liabilities: | |||
Accounts receivable | 1,793,055 | ||
Prepaid expenses and other assets | (258,431) | ||
Related party note receivable interest income | |||
Accounts payable and accrued liabilities | 7,953,598 | ||
Accrued liabilities | 1,251,677 | ||
Royalties payable | (313,381) | ||
Royalties payable – related party | 323,717 | ||
Net cash provided by operating activities | 484,474 | ||
Investing activities: | |||
Development of crude oil and gas properties | (238,499) | ||
Acquisition of business, net of cash acquired | (30,827,804) | ||
Trust Account withdrawals | 49,362,479 | ||
Issuance of related party note receivable | |||
Net cash provided by (used in) investing activities | 18,296,176 | ||
Financing activities: | |||
Proceeds from issuance of long-term debt | 28,000,000 | ||
Payment of debt issuance costs | (808,992) | ||
Repayments of long-term debt | (319,297) | ||
Member distributions | |||
Repayment of related party notes payable | |||
Redemptions of common stock | (44,737,839) | ||
Net cash provided by (used in) financing activities | (17,866,128) | ||
Net change in cash and cash equivalents | 914,522 | ||
Cash and cash equivalents at beginning of period | 2,590,932 | ||
Cash and cash equivalents at end of period | 3,505,454 | $ 2,590,932 | |
Cash paid during the period for: | |||
Interest on debt | 370,625 | ||
Income taxes | 154,000 | ||
Amounts included in the measurement of operating lease liabilities | |||
Supplemental disclosure of non-cash investing and financing activities: | |||
Operating lease assets obtained in exchange for operating lease obligations | |||
Impact to right-of-use assets and lease liabilities due to lease modification | |||
Accrued purchases of property and equipment at period end | $ 141,481 |
Description of Organization and
Description of Organization and Business Operations | 12 Months Ended |
Dec. 31, 2023 | |
Description of Organization and Business Operations [Abstract] | |
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS | NOTE 1 — DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS Organization and General 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. 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 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. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2023 | |
Summary of Significant Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 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. 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. 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. 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. 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 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. 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 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. 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. |
Business Combination
Business Combination | 12 Months Ended |
Dec. 31, 2023 | |
Business Combination [Abstract] | |
BUSINESS COMBINATION | 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 HNRA, HNRA Upstream, LLC, a newly formed Delaware limited liability company which is managed by, and is a subsidiary of, HNRA (“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. O n November 15, 2023 (the “Closing Date”), as contemplated by the MIPA: ● HNRA 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 HNRA’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 HNRA 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) HNRA 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 HNRA 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 HNRA 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 HNRA (following the exercise by HNRA 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. OpCo A&R LLC Agreement In connection with the Closing, HNRA 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 HNRA) 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 HNRA 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 HNRA (“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, HNRA entered a Backstop Agreement (the “Backstop Agreement”) with Pogo Royalty and certain of HNRA’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. HNRA 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 HNRA. Founder Pledge Agreement In connection with the Closing, HNRA 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, HNRA 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 multiplied by minus 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. 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 HNRA Class A Common shares for Option Agreement 67,700 200,000 HNRA 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 |
Derivatives
Derivatives | 12 Months Ended |
Dec. 31, 2023 | |
Derivatives [Abstract] | |
DERIVATIVES | 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 Weighted Weighted Weighted 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 Weighted Weighted Weighted Q1-Q2 2023 20,000 $ 63.75 $ 97.79 $ 76.06 Q3-Q4 2023 20,000 $ 65.00 $ 100.00 $ 72.25 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 Amounts Net fair 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 Amounts Net fair 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 ) The effects of the Company’s derivatives on the consolidated statements of operations are summarized below: Successor Predecessor November 15, January 1, For the 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 ) |
Long-Term Debt and Notes Payabl
Long-Term Debt and Notes Payable | 12 Months Ended |
Dec. 31, 2023 | |
Long-Term Debt and Notes Payable [Abstract] | |
LONG-TERM DEBT AND NOTES PAYABLE | NOTE 5 — LONG-TERM DEBT AND NOTES PAYABLE The Company’s debt instruments are as follows: December 31, December 31, 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, HNRA (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 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. 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 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 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. 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 |
Forward Purchase Agrement
Forward Purchase Agrement | 12 Months Ended |
Dec. 31, 2023 | |
Forward Purchase Agreement [Abstract] | |
FORWARD PURCHASE AGREMENT | 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. 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”). 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. |
Stockholders_ Equity
Stockholders’ Equity | 12 Months Ended |
Dec. 31, 2023 | |
Stockholders’ Equity [Abstract] | |
STOCKHOLDERS’ EQUITY | NOTE 7 — STOCKHOLDERS’ EQUITY On November 15, 2023, as contemplated by the MIPA, HNRA 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 HNRA’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 HNRA 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 HNRA (“Common Stock”). Immediately upon consummation of the closing of the transactions contemplated by the MIPA (the “Closing”), HNRA 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 HNRA’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. 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. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 12 Months Ended |
Dec. 31, 2023 | |
Fair Value of Financial Instruments [Abstract] | |
FAIR VALUE OF FINANCIAL INSTRUMENTS: | 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 tra nsaction 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, 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. 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. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2023 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | 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. 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. 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. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2023 | |
Commitments and Contingencies [Abstract] | |
COMMITMENTS AND CONTINGENCIES | 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. 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. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2023 | |
Income Taxes [Abstract] | |
INCOME TAXES | 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, 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 ) The income tax provision consists of the following: For the November 15, 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, 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 November 15, 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. 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. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2023 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | 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 has no immediate effect on the listing of the Company’s Class A Common Stock (NYSE American: HNRA) or the Company’s public warrants (NYSE American: HNRAW) 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. |
Supplemental Disclosure of Oil
Supplemental Disclosure of Oil and Natural Gas Operations (Unaudited) | 12 Months Ended |
Dec. 31, 2023 | |
Supplemental Disclosure of Oil and Natural Gas Operations (Unaudited) [Abstract] | |
SUPPLEMENTAL DISCLOSURE OF OIL AND NATURAL GAS OPERATIONS (UNAUDITED) | 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 January 1, For the Exploration costs $ - $ - $ 1,031,300 Development costs 238,499 6,769,557 15,048,100 Total $ 238,499 $ 6,769,557 $ 16,079,400 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 Natural Total Oil Natural Total Proved Reserves: Beginning of period 17,577 4,572 18,339 17,868 3,714 18,487 Extensions and discoveries 1,817 277 1,863 — — — 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 3,307 15,965 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 2,456 11,686 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 Extensions and discoveries. Dispositions: Revisions of previous estimates. 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 2023 2023 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. 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 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 |
Accounting Policies, by Policy
Accounting Policies, by Policy (Policies) | 12 Months Ended |
Dec. 31, 2023 | |
Summary of Significant Accounting Policies [Abstract] | |
Basis of Presentation: | 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. 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 | 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 | 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: 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 | 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 | 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 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 | 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. 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 | 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 | 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, 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 | 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 | Product Revenues The Company accounts for sales in accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers 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 | 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. |
Warranty obligations | 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 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 | 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 |
Forward Purchase Agreement Valuation | Forward Purchase Agreement Valuation |
Concentration of Credit Risk | 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. |
Income taxes | 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 | 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. |
Derivatives (Tables)
Derivatives (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Derivatives [Abstract] | |
Schedule of Derivatives | The following table sets forth the derivative volumes by period as of December 31, 2023 for the Company: Price collars Period Volume Weighted Weighted Weighted Q1-Q2 2024 9,000 $ 70.00 $ 91,90 $ 91.90 Q3-Q4 2024 9,000 $ 70.00 $ 85.50 $ 85.50 Price collars Period Volume Weighted Weighted Weighted Q1-Q2 2023 20,000 $ 63.75 $ 97.79 $ 76.06 Q3-Q4 2023 20,000 $ 65.00 $ 100.00 $ 72.25 Commodity Swaps Weighted Volume average Period (Bbls/month) price ($/Bbl) Q1-Q4 2024 3,000 $ 71.30 Q1-Q4 2025 3,000 $ 67.96 |
Schedule of Conducting Derivative Activities | 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 Amounts Net fair 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 Amounts Net fair 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 ) |
Schedule of Derivatives on the Consolidated Statements of Operations | The effects of the Company’s derivatives on the consolidated statements of operations are summarized below: Successor Predecessor November 15, January 1, For the 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 ) |
Long-Term Debt and Notes Paya_2
Long-Term Debt and Notes Payable (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Long-Term Debt and Notes Payable [Abstract] | |
Schedule of Debt Instruments | The Company’s debt instruments are as follows: December 31, December 31, 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 |
Schedule of Summarizes the Company’S Maturities of Debt Instruments | 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 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Fair Value of Financial Instruments [Abstract] | |
Schedule of Table Represents the Weighted Average Inputs Used in Calculating the Fair Value of the Prepaid Forward Contract and the Maturity Consideration | 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, Successor Stock price $ 2.03 Term (in years) 2.11 Expected volatility 40.7 % Risk-free interest rate 3.96 % Expected dividend yield — % |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Income Taxes [Abstract] | |
Schedule of Net Deferred Tax Asset | As of December 31, 2023, the Company’s net deferred tax assets were as follows: December 31, 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 ) |
Schedule of Income Tax Provision | The income tax provision consists of the following: For the November 15, 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 ) |
Schedule of Reconciliation of the Federal Income Tax Rate | A reconciliation of the federal income tax rate to the Company’s effective tax rate is as follows: For the November 15, 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 % |
Supplemental Disclosure of Oi_2
Supplemental Disclosure of Oil and Natural Gas Operations (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Supplemental Disclosure of Oil and Natural Gas Operations (Unaudited) [Abstract] | |
Schedule of Capitalized Costs Related to Crude Oil and Natural Gas Exploration and Production 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 |
Schedule of Costs Incurred in Crude Oil and Natural Gas Exploration | Costs incurred in crude oil and natural gas exploration and development for the periods presented: Successor Predecessor November 15, 2023 to January 1, For the Exploration costs $ - $ - $ 1,031,300 Development costs 238,499 6,769,557 15,048,100 Total $ 238,499 $ 6,769,557 $ 16,079,400 |
Schedule of Proved Developed and Proved Undeveloped Reserves | 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 Natural Total Oil Natural Total Proved Reserves: Beginning of period 17,577 4,572 18,339 17,868 3,714 18,487 Extensions and discoveries 1,817 277 1,863 — — — 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 3,307 15,965 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 2,456 11,686 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 |
Schedule of Standardized Measure of Discounted Future Net Cash Flows | The standardized measure of discounted future net cash flows relating to proved oil and natural gas reserves is as follows: For the year ended 2023 2023 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 |
Schedule of Changes in the Standardized Measure of Discounted Future Net Cash Flows | 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 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 |
Description of Organization a_2
Description of Organization and Business Operations (Details) - USD ($) | 2 Months Ended | 10 Months Ended | 12 Months Ended | |||||
Nov. 15, 2023 | May 11, 2023 | Aug. 16, 2022 | Feb. 15, 2022 | Dec. 31, 2023 | Nov. 14, 2023 | Dec. 31, 2023 | May 05, 2022 | |
Description of Organization and Business Operations [Line Items] | ||||||||
Price per unit sold (in Dollars per share) | $ 10.95 | $ 10.95 | ||||||
Shares purchased additionally (in Shares) | 1,800,000 | |||||||
Price per shares (in Dollars per share) | $ 6.5 | $ 6.5 | ||||||
Share of common stock (in Shares) | 90,000 | 90,000 | ||||||
Excise tax percentage | 1% | 20.97% | ||||||
Public shares total (in Shares) | 3,323,707 | |||||||
Aggregate redemption | $ 12,346,791 | |||||||
Cash | $ 31,074,127 | $ 31,074,127 | ||||||
Working capital | $ 13,300,601 | 13,300,601 | ||||||
Cash flow from operations | $ 36,383,179 | |||||||
Successor | Successor | Predecessor | ||||||
Agreement amount | $ 150,000,000 | 150,000,000 | ||||||
IPO [Member] | ||||||||
Description of Organization and Business Operations [Line Items] | ||||||||
Shares consummated (in Shares) | 7,500,000 | |||||||
Price per unit sold (in Dollars per share) | $ 10 | |||||||
Shares purchased additionally (in Shares) | 1,125,000 | |||||||
Cash flow from operations | $ 8,675,037 | $ 8,675,037 | ||||||
Private Placement [Member] | ||||||||
Description of Organization and Business Operations [Line Items] | ||||||||
Shares consummated (in Shares) | 505,000 | |||||||
Price per shares (in Dollars per share) | $ 10 | |||||||
Generating proceeds | $ 5,050,000 | |||||||
Aggregate shares (in Shares) | 505,000 | 505,000 | ||||||
Price per share value (in Dollars per share) | $ 10 | $ 10 | ||||||
Share of common stock (in Shares) | 1 | 1 | ||||||
Going Concern Considerations [Member] | ||||||||
Description of Organization and Business Operations [Line Items] | ||||||||
Cash | $ 3,505,454 | $ 3,505,454 | ||||||
U.S. federal [Member] | ||||||||
Description of Organization and Business Operations [Line Items] | ||||||||
Excise tax percentage | 1% | |||||||
Warrant [Member] | Private Placement [Member] | ||||||||
Description of Organization and Business Operations [Line Items] | ||||||||
Price per share value (in Dollars per share) | $ 11.5 | $ 11.5 | ||||||
Excise Tax Liability [Member] | ||||||||
Description of Organization and Business Operations [Line Items] | ||||||||
Excise tax percentage | 1% | |||||||
Public shares total (in Shares) | 4,115,597 | |||||||
Aggregate redemption | $ 43,318,207 | |||||||
Excise tax | $ 474,837 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Details) - USD ($) | 2 Months Ended | 10 Months Ended | 12 Months Ended | |
Dec. 31, 2023 | Nov. 14, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | |
Summary of Significant Accounting Policies (Details) [Line Items] | ||||
Conversion of shares (in Shares) | 6,847,500 | |||
Number of warrants to purchase shares (in Shares) | 4,094,250 | 4,094,250 | ||
Depreciation depletion and amortization expense | $ 1,497,749 | $ 1,613,402 | ||
Effective tax rate | 100% | 100% | ||
Federal depository insurance coverage | $ 250,000 | $ 250,000 | ||
Cash balance exceeded | 342,901 | $ 342,901 | ||
Successor [Member] | ||||
Summary of Significant Accounting Policies (Details) [Line Items] | ||||
Depreciation depletion and amortization expense | $ 352,127 | |||
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Customer One [Member] | ||||
Summary of Significant Accounting Policies (Details) [Line Items] | ||||
Accounts receivable | 96% | |||
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Customer Two [Member] | ||||
Summary of Significant Accounting Policies (Details) [Line Items] | ||||
Accounts receivable | 93% |
Business Combination (Details)
Business Combination (Details) | 10 Months Ended | 12 Months Ended | |||||
Nov. 15, 2023 USD ($) $ / shares shares | Nov. 14, 2023 USD ($) | Dec. 31, 2023 USD ($) $ / shares $ / item shares | Dec. 31, 2022 USD ($) shares | Jan. 15, 2024 $ / shares | Nov. 13, 2023 $ / shares shares | Jul. 01, 2023 | |
Business Combination [Line Items] | |||||||
Outstanding membership interests | 99% | ||||||
Cash consideration (in Dollars) | $ | $ 31,074,127 | ||||||
Preferred units | 1,500,000 | ||||||
Promissory note (in Dollars) | $ | $ 15,000,000 | ||||||
Pay to seller (in Dollars) | $ | 1,925,873 | ||||||
Escrowed share consideration (in Dollars) | $ | $ 500,000 | ||||||
Per unit (in Dollars per share) | $ / shares | $ 10 | ||||||
Shares issued | 90,000 | ||||||
Fair value (in Dollars) | $ | $ 67,700 | ||||||
Predecessor recognized a loss on sale of assets (in Dollars) | $ | $ (816,011) | ||||||
Purchase price per unit (in Dollars per Item) | $ / item | 10 | ||||||
Per share (in Dollars per share) | $ / shares | $ 6.5 | ||||||
Aggregate shares | 134,500 | ||||||
Fair value amount (in Dollars) | $ | $ 910,565 | $ 135,400 | |||||
Per share (in Dollars per share) | $ / shares | $ 10.95 | ||||||
Conversion value units | 1,500,000 | ||||||
Other current liabilities (in Dollars) | $ | $ 645,873 | ||||||
SPAC Subsidiary Contribution [Member] | |||||||
Business Combination [Line Items] | |||||||
Subsidiary outstanding common stock | 100% | ||||||
Outstanding membership interests | 1% | ||||||
Cash consideration (in Dollars) | $ | $ 900,000 | ||||||
Target Interests [Member] | |||||||
Business Combination [Line Items] | |||||||
Interests percentage | 99% | ||||||
Seller Promissory Note [Member] | |||||||
Business Combination [Line Items] | |||||||
Interests percentage | 12% | ||||||
Promissory note (in Dollars) | $ | $ 15,000,000 | ||||||
ORR Interest [Member] | |||||||
Business Combination [Line Items] | |||||||
Interests percentage | 10% | ||||||
Base option price (in Dollars) | $ | $ 30,000,000 | ||||||
Base option price percentage | 12% | ||||||
Predecessor recognized a loss on sale of assets (in Dollars) | $ | $ 816,011 | ||||||
Common Stock [Member] | |||||||
Business Combination [Line Items] | |||||||
Per share (in Dollars per share) | $ / shares | $ 6.77 | $ 10.86 | |||||
Common Class A [Member] | |||||||
Business Combination [Line Items] | |||||||
Shares issued | 5,235,131 | 5,235,131 | 20,040 | ||||
Shares issued | 10,000 | ||||||
Aggregate shares | 134,500 | ||||||
Fair value amount (in Dollars) | $ | $ 910,565 | ||||||
Per share (in Dollars per share) | $ / shares | $ 6.77 | $ 5 | |||||
Shares issued (in Dollars) | $ | $ 524 | ||||||
Class B Common Stock [Member] | |||||||
Business Combination [Line Items] | |||||||
Shares issued | 1,800,000 | 1,800,000 | |||||
Exchange rights shares | 200,000 | ||||||
Shares issued (in Dollars) | $ | $ 180 | ||||||
OpCo Class A Units [Member] | |||||||
Business Combination [Line Items] | |||||||
Contributed amount (in Dollars) | $ | $ 900,000 | ||||||
OpOc Class B Units [Member] | |||||||
Business Combination [Line Items] | |||||||
Common unit consideration | 2,000,000 | ||||||
Preferred units | 2,000,000 | ||||||
Units percentage | 50% | ||||||
Exchange rights shares | 200,000 | ||||||
OpCo Preferred Units [Member] | |||||||
Business Combination [Line Items] | |||||||
Preferred units | 1,500,000 | ||||||
Per unit (in Dollars per share) | $ / shares | $ 20 | ||||||
Shares issued | 1,300,000 | ||||||
OpCo Class B Units [Member] | |||||||
Business Combination [Line Items] | |||||||
Shares issued (in Dollars) | $ | $ 1,800,000 | ||||||
Subsequent Event [Member] | |||||||
Business Combination [Line Items] | |||||||
Exercise price per share (in Dollars per share) | $ / shares | $ 11.5 | ||||||
Cash [Member] | |||||||
Business Combination [Line Items] | |||||||
Cash consideration (in Dollars) | $ | $ 31,074,127 | ||||||
Limited Liability Company [Member] | Common Class A [Member] | |||||||
Business Combination [Line Items] | |||||||
Shares issued | 2,000,000 | ||||||
HNRA [Member] | |||||||
Business Combination [Line Items] | |||||||
Par value (in Dollars per share) | $ / shares | $ 0.0001 | ||||||
Shares | 121,000,000 | ||||||
HNRA [Member] | Minimum [Member] | |||||||
Business Combination [Line Items] | |||||||
Par value (in Dollars per share) | $ / shares | $ 10 | ||||||
HNRA [Member] | Maximum [Member] | |||||||
Business Combination [Line Items] | |||||||
Par value (in Dollars per share) | $ / shares | $ 13 | ||||||
HNRA [Member] | Preferred Stock [Member] | |||||||
Business Combination [Line Items] | |||||||
Par value (in Dollars per share) | $ / shares | $ 0.0001 | ||||||
Shares | 1,000,000 | ||||||
HNRA [Member] | Common Class A [Member] | |||||||
Business Combination [Line Items] | |||||||
Par value (in Dollars per share) | $ / shares | $ 0.0001 | ||||||
Shares | 100,000,000 | ||||||
HNRA [Member] | Class B Common Stock [Member] | |||||||
Business Combination [Line Items] | |||||||
Par value (in Dollars per share) | $ / shares | $ 0.0001 | ||||||
Shares | 20,000,000 | ||||||
HNRA [Member] | Subsequent Event [Member] | |||||||
Business Combination [Line Items] | |||||||
Number of trust shares | 10% | ||||||
HNRA [Member] | Subsequent Event [Member] | Common Class A [Member] | |||||||
Business Combination [Line Items] | |||||||
Number of trust shares | 10% | ||||||
OpOc Class B Units [Member] | Class B Common Stock [Member] | |||||||
Business Combination [Line Items] | |||||||
Shares | 2,000,000 |
Business Combination (Details)
Business Combination (Details) - Schedule of Acquisition was Accounted for a Business Combination | 12 Months Ended |
Dec. 31, 2023 USD ($) | |
Business Combination (Details) - Schedule of Acquisition was Accounted for a Business Combination [Line Items] | |
Cash | $ 31,074,127 |
Side Letter payable | 1,925,873 |
Promissory note to Sellers of Pogo Business | 15,000,000 |
10,000 HNRA Class A Common shares for Option Agreement | 67,700 |
200,000 HNRA 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 | |
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 |
Successor [Member] | |
Purchase Price Allocation | |
Cash | $ 246,323 |
Business Combination (Details_2
Business Combination (Details) - Schedule of Acquisition was Accounted for a Business Combination (Parentheticals) | 12 Months Ended |
Dec. 31, 2023 shares | |
Schedule of Acquisition was Accounted for a Business Combination [Abstract] | |
Class A Common shares for Option Agreement | 10,000 |
Class A Common shares | 200,000 |
Class B Units | 1,800,000 |
Preferred Units | 1,500,000 |
Business Combination (Details_3
Business Combination (Details) - Schedule of the Pro-Forma Consolidated Results of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Schedule of the Pro-Forma Consolidated Results of Operations [Abstract] | ||
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 (in Dollars per share) | $ (0.03) | $ 0.67 |
Weighted Average common shares outstanding (in Shares) | 5,235,131 | 5,220,788 |
Derivatives (Details) - Schedul
Derivatives (Details) - Schedule of Derivatives | 12 Months Ended |
Dec. 31, 2023 $ / bbl MBbls | |
Q1-Q2 2024 [Member] | |
Schedule of Derivatives [Line Items] | |
Volume (in Thousands of Barrels (of Oil)) | MBbls | 9,000 |
Weighted average floor price | 70 |
Weighted average ceiling price | 9,190 |
Weighted average sold call | 91.9 |
Q3-Q4 2024 [Member] | |
Schedule of Derivatives [Line Items] | |
Volume (in Thousands of Barrels (of Oil)) | MBbls | 9,000 |
Weighted average floor price | 70 |
Weighted average ceiling price | 85.5 |
Weighted average sold call | 85.5 |
Q1-Q2 2023 [Member] | |
Schedule of Derivatives [Line Items] | |
Volume (in Thousands of Barrels (of Oil)) | MBbls | 20,000 |
Weighted average floor price | 63.75 |
Weighted average ceiling price | 97.79 |
Weighted average sold call | 76.06 |
Q3-Q4 2023 [Member] | |
Schedule of Derivatives [Line Items] | |
Volume (in Thousands of Barrels (of Oil)) | MBbls | 20,000 |
Weighted average floor price | 65 |
Weighted average ceiling price | 100 |
Weighted average sold call | 72.25 |
Q1-Q4 2024 [Member] | |
Schedule of Derivatives [Line Items] | |
Volume (in Thousands of Barrels (of Oil)) | MBbls | 3,000 |
Weighted average floor price | 71.3 |
Q1-Q4 2025 [Member] | |
Schedule of Derivatives [Line Items] | |
Volume (in Thousands of Barrels (of Oil)) | MBbls | 3,000 |
Weighted average floor price | 67.96 |
Derivatives (Details) - Sched_2
Derivatives (Details) - Schedule of Conducting Derivative Activities - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Gross fair value [Member] | Successor [Member] | ||
Commodity derivatives: | ||
Short-term derivative asset | $ 583,035 | |
Long-term derivative asset | 76,199 | |
Short-term derivative liability | (191,547) | |
Long-term derivative liability | ||
Gross fair value [Member] | Predecessor [Member] | ||
Commodity derivatives: | ||
Short-term derivative asset | $ 1,596,361 | |
Long-term derivative asset | ||
Short-term derivative liability | (2,787,715) | |
Long-term derivative liability | ||
Amounts netted [Member] | Successor [Member] | ||
Commodity derivatives: | ||
Short-term derivative asset | (191,547) | |
Long-term derivative asset | ||
Short-term derivative liability | (191,547) | |
Long-term derivative liability | ||
Amounts netted [Member] | Predecessor [Member] | ||
Commodity derivatives: | ||
Short-term derivative asset | 1,596,361 | |
Long-term derivative asset | ||
Short-term derivative liability | 1,596,361 | |
Long-term derivative liability | ||
Net fair value [Member] | Successor [Member] | ||
Commodity derivatives: | ||
Short-term derivative asset | 391,488 | |
Long-term derivative asset | 76,199 | |
Short-term derivative liability | ||
Long-term derivative liability | ||
Total derivative | $ 467,687 | |
Net fair value [Member] | Predecessor [Member] | ||
Commodity derivatives: | ||
Short-term derivative asset | ||
Long-term derivative asset | ||
Short-term derivative liability | (1,191,354) | |
Long-term derivative liability | ||
Total derivative | $ (1,191,354) |
Derivatives (Details) - Sched_3
Derivatives (Details) - Schedule of Derivatives on the Consolidated Statements of Operations - USD ($) | 2 Months Ended | 10 Months Ended | 12 Months Ended |
Dec. 31, 2023 | Nov. 14, 2023 | Dec. 31, 2022 | |
Schedule of Derivatives on the Consolidated Statements of Operations [Line Items] | |||
Total gain on unsettled derivatives | $ 1,215,693 | $ 2,185,000 | |
Total loss on settled derivatives | (1,163,736) | (6,978,790) | |
Net gain (loss) on derivatives | $ 51,957 | $ (4,793,790) | |
Successor [Member] | |||
Schedule of Derivatives on the Consolidated Statements of Operations [Line Items] | |||
Total gain on unsettled derivatives | $ 443,349 | ||
Total loss on settled derivatives | (102,541) | ||
Net gain (loss) on derivatives | $ 340,808 |
Long-Term Debt and Notes Paya_3
Long-Term Debt and Notes Payable (Details) - USD ($) | 12 Months Ended | |||||
Nov. 13, 2023 | Feb. 14, 2023 | Jun. 25, 2019 | Dec. 31, 2023 | Nov. 14, 2023 | Dec. 31, 2022 | |
Long-Term Debt and Notes Payable [Line Items] | ||||||
Payment exceed amount | $ 5,000,000 | |||||
Borrower amount | 1,000,000 | $ 26,750,000 | ||||
Borrower deposit | 5,000,000 | |||||
Deferred finance costs | 1,093,318 | |||||
Principal balance | $ 276,807,063 | |||||
Percentage of interest | 18% | |||||
Per warrant (in Dollars per share) | $ 1 | |||||
Warrant issued (in Shares) | 5,434,000 | |||||
Share issued (in Shares) | 90,000 | |||||
Loss on extinguishment | $ 2,280,437 | |||||
Maximum facility amount | $ 50,000,000 | |||||
Letters of credit outstanding amount | $ 23,750,000 | $ 702,600 | ||||
Debt Service Reserve Account [Member] | ||||||
Long-Term Debt and Notes Payable [Line Items] | ||||||
Borrower deposit | $ 2,600,000 | |||||
Class A Common Stock [Member] | ||||||
Long-Term Debt and Notes Payable [Line Items] | ||||||
Per warrant (in Dollars per share) | $ 11.5 | |||||
Share issued (in Shares) | 10,000 | |||||
Senior Secured Term Loan Agreement [Member] | ||||||
Long-Term Debt and Notes Payable [Line Items] | ||||||
Aggregate principal amount | $ 28,000,000 | |||||
Debt service reserve account fund | $ 2,600,000 | |||||
Loan accrues interest rate | 6.50% | |||||
Guaranty Agreement [Member] | ||||||
Long-Term Debt and Notes Payable [Line Items] | ||||||
Interest expense | $ 56,422 | |||||
Unamortized discount | 1,036,895 | |||||
Accrued interest | 173,004 | |||||
Seller Promissory Note [Member] | ||||||
Long-Term Debt and Notes Payable [Line Items] | ||||||
Aggregate principal amount | $ 15,000,000 | |||||
Loan accrues interest rate | 12% | |||||
Accrued interest | $ 277,397 | |||||
Private Notes Payable [Member] | ||||||
Long-Term Debt and Notes Payable [Line Items] | ||||||
Aggregate principal amount | $ 2,089,500 | $ 5,434,000 | ||||
Loan accrues interest rate | 15% | |||||
Unamortized discount | $ 1,135,131 | |||||
Accrued interest | $ 158,801 | |||||
Common stock price (in Dollars per share) | $ 11.5 | |||||
Share issued (in Shares) | 451,563 | |||||
Private Notes Payable [Member] | Class A Common Stock [Member] | ||||||
Long-Term Debt and Notes Payable [Line Items] | ||||||
Accrued interest | $ 168,271 |
Long-Term Debt and Notes Paya_4
Long-Term Debt and Notes Payable (Details) - Schedule of Debt Instruments - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Schedule of Debt Instruments [Abstract] | ||
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 |
Long-Term Debt and Notes Paya_5
Long-Term Debt and Notes Payable (Details) - Schedule of Summarizes the Company’S Maturities of Debt Instruments - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Schedule of Summarizes the Company’S Maturities of Debt Instruments [Abstract] | ||
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 | $ 26,750,000 |
Forward Purchase Agrement (Deta
Forward Purchase Agrement (Details) - USD ($) | 2 Months Ended | 10 Months Ended | 12 Months Ended | |||
Dec. 31, 2023 | Nov. 02, 2023 | Dec. 31, 2023 | Nov. 14, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | |
Forward Purchase Agreements [Line Items] | ||||||
Percentage of prepayment shortfall | 100% | |||||
Dilutive offering divided (in Dollars per share) | $ 10 | |||||
FPA Seller shares received (in Shares) | 90,000 | 90,000 | 90,000 | |||
Purchase price, per share (in Dollars per share) | $ 10.95 | $ 10.95 | $ 10.95 | |||
Fair value of the prepayment | $ 6,067,094 | $ 14,257,648 | ||||
Fair value of the maturity consideration | $ 1,704,416 | |||||
Change in fair value of forward purchase agreement | ||||||
Successor [Member] | ||||||
Forward Purchase Agreements [Line Items] | ||||||
Change in fair value of forward purchase agreement | $ 3,268,581 | |||||
Forward Purchase Agreement [Member] | ||||||
Forward Purchase Agreements [Line Items] | ||||||
Percentage of prepayment shortfall | 0.50% | |||||
FPA Seller shares received (in Shares) | 504,425 | 504,425 | 504,425 | |||
Purchase price | $ 545,356 | |||||
Purchase price, per share (in Dollars per share) | $ 10.95 | $ 10.95 | $ 10.95 | |||
Fees and expenses | $ 1,004,736 | |||||
Share price (in Dollars per share) | $ 3 | $ 3 | $ 3 | |||
Fair value of the prepayment | $ 6,066,324 | |||||
Reset Price [Member] | ||||||
Forward Purchase Agreements [Line Items] | ||||||
Reset price (in Dollars per share) | $ 10 | |||||
Recycled Shares [Member] | ||||||
Forward Purchase Agreements [Line Items] | ||||||
FPA Seller shares received (in Shares) | 50,070 | 50,070 | 50,070 |
Stockholders_ Equity (Details)
Stockholders’ Equity (Details) - USD ($) | 12 Months Ended | |||||
Nov. 15, 2023 | Nov. 13, 2023 | Oct. 17, 2022 | Dec. 31, 2023 | Feb. 14, 2023 | Dec. 31, 2022 | |
Stockholders’ Equity [Line Items] | ||||||
Common stock, par value (in Dollars per share) | $ 0.0001 | |||||
Preferred stock, shares authorized | 1,000,000 | 1,000,000 | 1,000,000 | |||
Preferred stock, per value (in Dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||
Shares of common stock | 1,800,000 | |||||
Cash proceeds from the Trust Account (in Dollars) | $ 36,383,179 | |||||
Share issued | 200,000 | |||||
Aggregate shares | 134,500 | |||||
Fair value amount (in Dollars) | $ 910,565 | $ 135,400 | ||||
Per share (in Dollars per share) | $ 10.95 | |||||
Shares of common stock at fair value | 90,000 | |||||
Subject to redemption shares | 0.0001 | |||||
Redemption price per share (in Dollars per share) | $ 5 | |||||
Redemption Price (in Dollars) | $ 3,567,960 | |||||
Cash proceeds (in Dollars) | $ 6,017,960 | |||||
Aggregate gross purchase price (in Dollars) | $ 150,000,000 | |||||
Number of share sold amount (in Dollars) | $ 2,000,000 | |||||
Weighted average price of common stock, percentage | 96% | |||||
Common Stock [Member] | ||||||
Stockholders’ Equity [Line Items] | ||||||
Common stock, par value (in Dollars per share) | $ 0.0001 | |||||
Shares of common stock | 89,000 | |||||
Fair value amount (in Dollars) | $ 900,000 | |||||
Common stock, shares issued | 60,000 | |||||
Redemption of common stock | 600,000 | |||||
Common Stock [Member] | ||||||
Stockholders’ Equity [Line Items] | ||||||
Per share (in Dollars per share) | $ 6.77 | $ 10.86 | ||||
Class A Common Stock [Member] | ||||||
Stockholders’ Equity [Line Items] | ||||||
Common stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||
Common stock, shares authorized | 100,000,000 | 100,000,000 | 100,000,000 | |||
Share issued | 200,000 | |||||
Aggregate shares | 134,500 | |||||
Fair value amount (in Dollars) | $ 910,565 | |||||
Per share (in Dollars per share) | $ 6.77 | $ 5 | ||||
Shares of common stock at fair value | 10,000 | |||||
Common stock, shares issued | 20,040 | 5,235,131 | 5,235,131 | |||
Common stock, shares outstanding | 5,235,131 | 5,235,131 | ||||
Common stock value (in Dollars) | $ 524 | |||||
Class B Common Stock [Member] | ||||||
Stockholders’ Equity [Line Items] | ||||||
Common stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||
Common stock, shares authorized | 20,000,000 | 20,000,000 | 20,000,000 | |||
Share issued | 2,000,000 | |||||
Common stock, shares issued | 1,800,000 | 1,800,000 | ||||
Common stock, shares outstanding | 1,800,000 | 1,800,000 | ||||
Common stock value (in Dollars) | $ 180 | |||||
Non-Redeemable Common Stock [Member] | ||||||
Stockholders’ Equity [Line Items] | ||||||
Common stock | 3,006,250 | |||||
Redeemable Common Stock [Member] | ||||||
Stockholders’ Equity [Line Items] | ||||||
Common stock | 4,509,403 | |||||
OpCo Class B Units [Member] | ||||||
Stockholders’ Equity [Line Items] | ||||||
Share issued | 200,000 | |||||
Common stock value (in Dollars) | $ 1,800,000 | |||||
Common Stock [Member] | ||||||
Stockholders’ Equity [Line Items] | ||||||
Shares of common stock at fair value | 20,000 | |||||
White Lion [Member] | ||||||
Stockholders’ Equity [Line Items] | ||||||
Common stock, shares issued | 138,122 | |||||
Common stock value (in Dollars) | $ 1,500,000 | |||||
Purchase Agreement [Member] | ||||||
Stockholders’ Equity [Line Items] | ||||||
Common stock effective rate | 400% | |||||
Dividend rate | 30% | |||||
HNRA [Member] | ||||||
Stockholders’ Equity [Line Items] | ||||||
Common stock, shares authorized | 121,000,000 | |||||
Shares of common stock | 3,323,707 |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Fair Value of Financial Instruments [Line Items] | ||
Net derivative asset | $ 467,687 | $ 1,191,354 |
Forward purchase agreement estimate rate | 50% | |
Fair value of warrants and redemption | $ 4,506,312 | |
Warrants and redemption value | 187,704 | |
Warrant Liability [Member] | ||
Fair Value of Financial Instruments [Line Items] | ||
Warrants and redemption value | $ 4,777,970 | |
Warrant [Member] | ||
Fair Value of Financial Instruments [Line Items] | ||
Discount rate | 15% | |
Forward Purchase Agreement [Member] | ||
Fair Value of Financial Instruments [Line Items] | ||
Dilutive offering price (in Dollars per share) | $ 5 |
Fair Value of Financial Instr_4
Fair Value of Financial Instruments (Details) - Schedule of Fair Value of the Prepaid Forward Contract and the Maturity Consideration | Dec. 31, 2023 |
Stock price [Member] | |
Schedule of Fair Value of the Prepaid Forward Contract and the Maturity Consideration [Line Items] | |
Derivative liability, measurement input | 2.03 |
Term [Member] | |
Schedule of Fair Value of the Prepaid Forward Contract and the Maturity Consideration [Line Items] | |
Derivative liability, measurement input | 2.11 |
Expected volatility [Member] | |
Schedule of Fair Value of the Prepaid Forward Contract and the Maturity Consideration [Line Items] | |
Derivative liability, measurement input | 40.7 |
Risk-free interest rate [Member] | |
Schedule of Fair Value of the Prepaid Forward Contract and the Maturity Consideration [Line Items] | |
Derivative liability, measurement input | 3.96 |
Expected dividend yield [Member] | |
Schedule of Fair Value of the Prepaid Forward Contract and the Maturity Consideration [Line Items] | |
Derivative liability, measurement input |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 12 Months Ended | ||||||||
Nov. 13, 2023 | Feb. 15, 2023 | Feb. 14, 2023 | Jan. 27, 2023 | Jan. 20, 2023 | May 05, 2022 | Dec. 31, 2023 | Dec. 31, 2022 | Nov. 15, 2023 | |
Related Party Transactions [Line Items] | |||||||||
Referral fee (in Shares) | 1,800,000 | ||||||||
Accounts payable | $ 900,000 | $ 4,795,208 | $ 1,218,054 | ||||||
Owes fee | $ 762,000 | ||||||||
Aggregate purchase price | $ 100,198 | $ 179,000 | |||||||
Aggregate principal amount | $ 179,000 | ||||||||
Accruing interest | 15% | ||||||||
Exercise price (in Dollars per share) | $ 1 | ||||||||
Price per share (in Dollars per share) | $ 10.95 | ||||||||
Extinguishment amount | $ 2,280,437 | ||||||||
Fair value amount | $ 203,100 | ||||||||
Initial cash amount | $ 25,000 | ||||||||
Monthly payment | 8,000 | ||||||||
Agreement amount paid | 12,000 | ||||||||
Stock price | $ 250,000 | $ 150,000 | |||||||
Initial cash amount | $ 31,074,127 | ||||||||
Share of common stock (in Shares) | 90,000 | ||||||||
Monthly payment | $ 22,000 | ||||||||
Cash proceeds | $ 350,000 | ||||||||
Loan interest rate | 0.50% | ||||||||
Common Stock [Member] | |||||||||
Related Party Transactions [Line Items] | |||||||||
Common stock, shares issued (in Shares) | 60,000 | ||||||||
Class A Common Stock [Member] | |||||||||
Related Party Transactions [Line Items] | |||||||||
Common stock, shares issued (in Shares) | 20,040 | 5,235,131 | 5,235,131 | ||||||
Exercise price (in Dollars per share) | $ 11.5 | ||||||||
Price per share (in Dollars per share) | $ 5 | $ 6.77 | |||||||
Share of common stock (in Shares) | 10,000 | ||||||||
Restricted Stock Units (RSUs) [Member] | |||||||||
Related Party Transactions [Line Items] | |||||||||
Shares issued (in Shares) | 30,000 | 60,000 | |||||||
RMH Ltd. [Member] | |||||||||
Related Party Transactions [Line Items] | |||||||||
Share of common stock (in Shares) | 60,000 | ||||||||
Related Party [Member] | |||||||||
Related Party Transactions [Line Items] | |||||||||
Payable to related party | $ 900,000 | ||||||||
Cash proceeds | $ 4,000,000 | ||||||||
Dante Caravaggio [Member] | |||||||||
Related Party Transactions [Line Items] | |||||||||
Extinguishment amount | $ 101,204 | ||||||||
RMH Ltd. [Member] | |||||||||
Related Party Transactions [Line Items] | |||||||||
Shares issued (in Shares) | 264,000 | ||||||||
Alexandria [Member] | Class A Common Stock [Member] | |||||||||
Related Party Transactions [Line Items] | |||||||||
Common stock, shares issued (in Shares) | 89,000 | ||||||||
Mr. Caravaggio [Member] | Class A Common Stock [Member] | |||||||||
Related Party Transactions [Line Items] | |||||||||
Common stock, shares issued (in Shares) | 179,000 | ||||||||
Dante Caravaggio, LLC [Member] | Class A Common Stock [Member] | |||||||||
Related Party Transactions [Line Items] | |||||||||
Common stock, shares issued (in Shares) | 30,000 | ||||||||
Rhône Merchant House, Ltd [Member] | |||||||||
Related Party Transactions [Line Items] | |||||||||
Initial cash amount | $ 50,000 | ||||||||
Business Combination [Member] | |||||||||
Related Party Transactions [Line Items] | |||||||||
Business combination percentage | 2% |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Commitments and Contingencies [Abstract] | ||
Other liabilities | $ 675,000 | $ 675,000 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 12 Months Ended | |
Aug. 16, 2022 | Dec. 31, 2023 | |
Income Taxes [Line Items] | ||
U.S. federal net operating loss carryover (in Dollars) | $ 1,770,098 | |
Taxable income | 1% | 20.97% |
Taxable income limitation | 80% | |
Taxable income years prior | 100% | |
Statutory rate | 21% | |
U.S [Member] | ||
Income Taxes [Line Items] | ||
Taxable income | 80% | |
Modified taxable income | 80% | |
Statutory rate | 21% |
Income Taxes (Details) - Schedu
Income Taxes (Details) - Schedule of Net Deferred Tax Asset | Dec. 31, 2023 USD ($) |
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) |
Income Taxes (Details) - Sche_2
Income Taxes (Details) - Schedule of Income Tax Provision - Successor [Member] - USD ($) | 2 Months Ended | 12 Months Ended |
Dec. 31, 2023 | Dec. 31, 2023 | |
Current income tax (benefit) expense | ||
Federal | $ (22,007) | |
State | ||
Total current income tax benefit | (22,007) | |
Deferred tax (benefit) expense: | ||
Federal | (146,762) | |
State | (325,795) | |
Valuation allowance | (571,975) | |
Total deferred income tax (benefit) expense | (2,365,632) | |
Total income tax (benefit) expense | $ (2,387,639) | $ (2,387,639) |
Income Taxes (Details) - Sche_3
Income Taxes (Details) - Schedule of Reconciliation of the Federal Income Tax Rate | 12 Months Ended | |
Aug. 16, 2022 | Dec. 31, 2023 | |
Schedule of Reconciliation of the Federal Income Tax Rate [Abstract] | ||
Statutory federal income tax rate | 21% | |
State Taxes (Net of Federal Benefit) | 2.86% | |
Permanent Differences | (8.11%) | |
Change in valuation allowance | 5.02% | |
Other | 0.19% | |
Income tax provision | 1% | 20.97% |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | 12 Months Ended | ||||
Nov. 15, 2024 | Dec. 31, 2023 | Apr. 18, 2024 | Mar. 07, 2024 | Jan. 15, 2024 | |
Subsequent Events [Line Items] | |||||
Cash proceeds (in Dollars) | $ 350,000 | ||||
Additional warrants issued | 350,000 | ||||
Vesting period | 3 years | ||||
Shares issued | 90,000 | ||||
Additional shares issued | 200,000 | ||||
Daily trading volume of common stock percentage | 7% | ||||
Unsecured Debt [Member] | |||||
Subsequent Events [Line Items] | |||||
Warrants exercise price (in Dollars per share) | $ 11.5 | ||||
Subsequent Event [Member] | |||||
Subsequent Events [Line Items] | |||||
Warrants exercise price (in Dollars per share) | $ 11.5 | ||||
Subsequent Event [Member] | Common Stock [Member] | |||||
Subsequent Events [Line Items] | |||||
Shares issued | 440,000 | ||||
Additional shares issued | 301,878 | ||||
Forecast [Member] | |||||
Subsequent Events [Line Items] | |||||
Deposit funds (in Dollars) | $ 5,000,000 | ||||
Deposit amount (in Dollars) | $ 500,000 | ||||
Percentage of proceeds of transaction | 10% | ||||
Restricted Stock Units (RSUs) [Member] | |||||
Subsequent Events [Line Items] | |||||
Aggregate shares received | 224,500 | ||||
Aggregate RSU’s | 112,500 | ||||
Vesting period | 3 years | ||||
Employees shares received | 35,000 | ||||
Award agreement | 30,000 | ||||
Restricted Stock Units (RSUs) [Member] | Chief Executive Officer [Member] | |||||
Subsequent Events [Line Items] | |||||
Employees shares received | 285,000 | ||||
Restricted Stock Units (RSUs) [Member] | Chief Financial Officer [Member] | |||||
Subsequent Events [Line Items] | |||||
Employees shares received | 50,000 | ||||
Restricted Stock Units (RSUs) [Member] | Forecast [Member] | |||||
Subsequent Events [Line Items] | |||||
Aggregate RSU’s | 112,000 | ||||
Restricted Stock Units (RSUs) [Member] | RMH Ltd. [Member] | |||||
Subsequent Events [Line Items] | |||||
Award agreement | 60,000 |
Supplemental Disclosure of Oi_3
Supplemental Disclosure of Oil and Natural Gas Operations (Unaudited) (Details) | 12 Months Ended | |
Dec. 31, 2023 MBoe | Dec. 31, 2022 MBoe | |
Supplemental Disclosure of Oil and Natural Gas Operations [Line Items] | ||
Reportable operating segment | 1 | |
Undivided royalty interest | 10% | |
Negative revision | (1,995) | 325 |
Future net cash flows discounted rate | 10% | |
Subject to revision discount rate | 10% | |
Proved reserves [Member] | ||
Supplemental Disclosure of Oil and Natural Gas Operations [Line Items] | ||
Extensions and discoveries | 1,863 | 0 |
Supplemental Disclosure of Oi_4
Supplemental Disclosure of Oil and Natural Gas Operations (Unaudited) (Details) - Schedule of Capitalized Costs Related to Crude Oil and Natural Gas Exploration and Production Activities - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Schedule of Capitalized Costs Related to Crude Oil and Natural Gas Exploration and Production Activities [Abstract] | ||
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 |
Supplemental Disclosure of Oi_5
Supplemental Disclosure of Oil and Natural Gas Operations (Unaudited) (Details) - Schedule of Costs Incurred in Crude Oil and Natural Gas Exploration - USD ($) | 2 Months Ended | 10 Months Ended | 12 Months Ended |
Dec. 31, 2023 | Nov. 14, 2023 | Dec. 31, 2022 | |
Schedule of Costs Incurred in Crude Oil and Natural Gas Exploration [Abstract] | |||
Exploration costs | $ 1,031,300 | ||
Development costs | 238,499 | 6,769,557 | 15,048,100 |
Total | $ 238,499 | $ 6,769,557 | $ 16,079,400 |
Supplemental Disclosure of Oi_6
Supplemental Disclosure of Oil and Natural Gas Operations (Unaudited) (Details) - Schedule of Proved Developed and Proved Undeveloped Reserves | 12 Months Ended | |
Dec. 31, 2023 MBoe mJ l | Dec. 31, 2022 MBoe mJ l | |
Proved Reserves [Member] | ||
Proved Reserves: | ||
Beginning of period | 18,339 | 18,487 |
Extensions and discoveries | 1,863 | |
Dispositions | (1,834) | |
Revisions to previous estimates | (1,995) | 325 |
Production | (409) | (473) |
End of period | 15,965 | 18,339 |
Proved Developed Reserves [Member] | ||
Proved Reserves: | ||
Beginning of period | 13,609 | 13,640 |
Extensions and discoveries | MBoe | 1,863 | 0 |
End of period | 11,686 | 13,609 |
Proved Undeveloped Reserves [Member] | ||
Proved Reserves: | ||
Beginning of period | 4,730 | 4,847 |
End of period | 4,279 | 4,730 |
Oil [Member] | Proved Reserves [Member] | ||
Proved Reserves: | ||
Beginning of period (in Liters) | l | 17,577 | 17,868 |
Extensions and discoveries (in Liters) | l | 1,817 | |
Dispositions (in Liters) | l | (1,758) | |
Revisions to previous estimates (in Liters) | l | (1,758) | 106 |
Production (in Liters) | l | (349) | (397) |
End of period (in Liters) | l | 15,414 | 17,577 |
Oil [Member] | Proved Developed Reserves [Member] | ||
Proved Reserves: | ||
Beginning of period (in Liters) | l | 13,014 | 13,161 |
End of period (in Liters) | l | 11,277 | 13,014 |
Oil [Member] | Proved Undeveloped Reserves [Member] | ||
Proved Reserves: | ||
Beginning of period (in Liters) | l | 4,564 | 4,707 |
End of period (in Liters) | l | 4,137 | 4,564 |
Natural Gas [Member] | Proved Reserves [Member] | ||
Proved Reserves: | ||
Beginning of period | 4,572 | 3,714 |
Extensions and discoveries | 277 | |
Dispositions | (457) | |
Revisions to previous estimates | (729) | 1,315 |
Production | (356) | (457) |
End of period | 3,307 | 4,572 |
Natural Gas [Member] | Proved Developed Reserves [Member] | ||
Proved Reserves: | ||
Beginning of period | 3,572 | 2,875 |
End of period | 2,456 | 3,572 |
Natural Gas [Member] | Proved Undeveloped Reserves [Member] | ||
Proved Reserves: | ||
Beginning of period | 1,000 | 839 |
End of period | 850 | 1,000 |
Supplemental Disclosure of Oi_7
Supplemental Disclosure of Oil and Natural Gas Operations (Unaudited) (Details) - Schedule of Standardized Measure of Discounted Future Net Cash Flows $ in Thousands | Dec. 31, 2023 USD ($) |
Successor [Member] | |
Schedule of Standardized Measure of Discounted Future Net Cash Flows [Line Items] | |
Future cash inflows | $ 1,216,840 |
Future production costs | (438,653) |
Future development costs | (94,156) |
Future net cash flows | 684,031 |
10% annual discount for estimated timing of cash flows | (403,413) |
Standardized measure of discounted future net cash flows | 280,618 |
Predecessor [Member] | |
Schedule of Standardized Measure of Discounted Future Net Cash Flows [Line Items] | |
Future cash inflows | 1,680,514 |
Future production costs | (451,155) |
Future development costs | (124,216) |
Future net cash flows | 1,105,143 |
10% annual discount for estimated timing of cash flows | (585,596) |
Standardized measure of discounted future net cash flows | $ 519,547 |
Supplemental Disclosure of Oi_8
Supplemental Disclosure of Oil and Natural Gas Operations (Unaudited) (Details) - Schedule of Standardized Measure of Discounted Future Net Cash Flows (Parentheticals) | 12 Months Ended |
Dec. 31, 2023 | |
Successor [Member] | |
Schedule of Standardized Measure of Discounted Future Net Cash Flows [Line Items] | |
Annual discount | 10% |
Predecessor [Member] | |
Schedule of Standardized Measure of Discounted Future Net Cash Flows [Line Items] | |
Annual discount | 10% |
Supplemental Disclosure of Oi_9
Supplemental Disclosure of Oil and Natural Gas Operations (Unaudited) (Details) - Schedule of Changes in the Standardized Measure of Discounted Future Net Cash Flows - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Schedule of Changes in the Standardized Measure of Discounted Future Net Cash Flows [Abstract] | ||
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 |