Successful Infrastructure Improvements and Upgrades Positively Impact Oil Production
HOUSTON, TX / ACCESSWIRE / October 3, 2024 / EON Resources Inc. (NYSE American:EONR) ("EON" or the "Company") is an independent upstream energy company with oil and gas properties in the Permian Basin. Today, the Company announced the successful completion of infrastructure improvements and upgrades increasing daily oil production to over 1,000 gross barrels of oil per day ("BOPD") range from the inherited baseline of 925 BOPD.
In addition to the oil production starting to increase, infrastructure improvements have increased water injection by 50% from previous levels. The impact of water injection is not immediate, but does improve oil production over the following several months.
The completion of these projects will enhance production for the next three-to-five years. Along with the aforementioned improvements, the company instituted a chemical /acidizing treatment program on 24 wells which resulted in an increase of 80 BOPD; the cost of this project was only $5,500 per well, with a payback period of less than 2 months. Oil production stabilized during the summer, and the company is now seeing increased daily production without increased operating costs.
"Chevron, our largest customer, has notified us they will gladly take all our production, as well as any increases we produce," said Dante Caravaggio, President and CEO of EON. "We expect production in the 4th quarter to increase as we approach breakeven. When you combine the upgrades and improvements we completed, plus our chemical / acidizing treatment program, it's obvious production will increase."
"Beginning October 1st, we will increase our chemical treatment program activity with another 50-75 wells, as well as recompletion of another 20 wells," said Jesse Allen, Vice President of Operations of EON. "These activities will enhance production significantly in the 4th quarter and throughout 2025. Our engineers and management team have decades of experience in stimulating oil and gas wells as well as fracture stimulation. We are taking an innovative and scientific approach to fracture stimulation that can have a material effect on production and reducing downtime."
"Fracture stimulation uses sand to enhance production, but EON will use fly ash, which greatly enhances well productivity," Mr. Allen continued. "It is less expensive than sand that will enable us to increase production and reduce costs. We expect to recomplete 20 wells in the Seven Rivers intervals over the next several months, with an expected payback period of approximately 3 to 4 months."
"In the future we will be stimulating the unperforated intervals in the San Andres intervals to produce new oil," Mr. Allen concluded. "Lastly, we are considering the use of infield drilling to reduce our patterns from 40-acre spacing to either 20-acre or 10-acre spacing. The future of EON is bright, and continuing to build production makes us extremely confident we will see an increase in revenue and earnings in the near future."
EON Resources, Inc. published a letter to shareholders on September 23, 2024.
About the Oil Field Property
In November 2023, the Company acquired LH Operating, LLC ("LHO") including its holdings in New Mexico of oil and gas waterflood production comprising 13,700 contiguous leasehold acres, 342 producing wells and 207 injection wells situated on 20 federal and 3 state leases in the Grayburg-Jackson Oil Field. The Grayburg-Jackson Oil Field is located on the Northwest Shelf of the prolific Permian Basin in Eddy County, New Mexico.
Leasehold rights of LHO, a wholly owned subsidiary of the Company, include the Seven Rivers, Queen, Grayburg and San Andres intervals that range from as shallow as 1,500 feet to 4,000 feet in depth. The December 2023 reserve report from our third-party engineer, William H. Cobb and Associates, Inc. ("Cobb"), reflects LHO to have proven reserves of approximately 15.4 million barrels of oil and 3.5 billion cubic feet of natural gas. The mapped original-oil-in-place ("OOIP") in the LHO leasehold is approximately 876 million barrels of oil in the Grayburg and San Andres intervals and 80 million barrels in the Seven Rivers interval for a total OOIP of approximately 956,000,000 barrels of oil.
Our primary production is currently from the Seven Rivers zone. In addition to proven reserves, the Company believes we may access an additional 34 million barrels of oil by adding perforations in the Grayburg and San Andres formations. With proven oil reserves of over 15 million barrels, combined with the potential 34 million additional barrels from the Grayburg and San Andres zones, LHO should produce oil and a revenue stream for more than two decades with a slow decline rate.
About EON Resources Inc.
EON is an independent upstream energy company focused on maximizing total returns to its shareholders through the development of onshore oil and natural gas properties in the United States. EON's long-term goal is to maximize total shareholder value from a diversified portfolio of long-life oil and natural gas properties built through acquisition and through selective development, production enhancement, and other exploitation efforts on its oil and natural gas properties.
EON's Class A Common Stock trades on the NYSE American (NYSE American: EONR) and our public warrants trade on the NYSE American (NYSE American: EONR WS). For more information on EON, please visit the Company's website: https://eon-r.com/
Forward-Looking Statements
This press release includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties that could cause actual results to differ materially from what is expected. Words such as "expects," "believes," "anticipates," "intends," "estimates," "seeks," "may," "might," "plan," "possible," "should" and variations and similar words and expressions are intended to identify such forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Such forward-looking statements relate to future events or future results, based on currently available information and reflect the Company's management's current beliefs. A number of factors could cause actual events or results to differ materially from the events and results discussed in the forward-looking statements. Important factors - including the availability of funds, the results of financing efforts and the risks relating to our business - that could cause actual results to differ materially from the Company's expectations are disclosed in the Company's documents filed from time to time on EDGAR (see www.edgar-online.com) and with the Securities and Exchange Commission (see www.sec.gov). Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
Contact Information
Michael J. Porter
Investor Relations - President, PORTER, LEVAY & ROSE, INC.
[email protected]
SOURCE: EON Resources Inc.