EON Resources announces $22.5M funding LOI with Enstream

EON Resources (EONR) announced the signing of a non-binding Letter of Intent with Enstream Capital Management for $22.5 million of well completion funding. The Company anticipates using the WCF for the development of 45 wells using low-cost workovers on the Company’s 13,700 leasehold acres in Eddy County, New Mexico. The Company also plans to use the funds for the acquisition of an Overriding Royalty Interest in the Property. The Company looks for key attributes of the WCF to include: Structured similar to a term overriding royalty interest to ECM and is considered neither debt nor equity. Provides asset-level funding to the Company enabling conversion of oil and gas “behind pipe” and lower-risk, proved undeveloped reserves into production. Placement of revenue attributable to ECM’s interest into an escrow, then drawn monthly by the Company based upon, and to be used for, an agreed development plan under certain criteria. Increases the Company’s producing reserves, business profitability, bank collateral and value, and balance sheet strength without diluting Company equity. EON and ECM view their relationship as a long-term opportunity to provide funding for multi-phase and multi-year development of the Property with minimal capital outlays by the Company. The details of the proposed production sharing arrangement proposed with ECM are confidential presently, but the Company’s objectives will be to cause improvements in production, increase revenues, net cash flow and recoverable reserves over the next 12 months, with a goal to increase gross oil production by 1000 BOPD to 2000 BOPD. EON has substantial development prospects to pursue follow-on identified development phases, with over one billion barrels of original oil in place under its 13,700 contiguous acreage and 549 wells on its leases.