EON Resources (EONR) risk factors, FY2024 10-K

Risks Related to Our Business

1. 01There is substantial doubt about our ability to continue as a “going concern.”
2. 02Our producing properties are located in the Permian Basin, making it vulnerable to risks associated with operating in a single geographic area
3. 03Title to the properties in which we have an interest may be impaired by title defects
4. 04Our future success depends on replacing reserves through acquisitions and the exploration and development activities
5. 05Our failure to successfully identify, complete and integrate acquisitions of properties or businesses could materially and adversely affect its growth, results of operations and cash flows
6. 06We may acquire properties that do not produce as projected, and it may be unable to determine reserve potential, identify liabilities associated with such properties or obtain protection from sellers against such liabilities
7. 07Any acquisitions that Pogo completes will be subject to substantial risks
8. 08Our identified development activities are susceptible to uncertainties that could materially alter the occurrence or timing of our development activities
9. 09Acquisitions and development of our leases will require substantial capital, and our company may be unable to obtain needed capital or financing on satisfactory terms or at all
10. 10The widespread outbreak of an illness, pandemic (like COVID-19) or any other public health crisis may have material adverse effects on our business, financial position, results of operations and/or cash flows
11. 11Our estimated reserves are based on many assumptions that may turn out to be inaccurate. Any material inaccuracies in these reserve estimates or underlying assumptions will materially affect the quantities and present value of its reserves
12. 12Operating hazards and partially insured or uninsured risks may result in substantial losses to Pogo and any losses could adversely affect our results of operations and cash flows
13. 13Loss of our information and computer systems, including as a result of cyber-attacks, could materially and adversely affect our business
14. 14A terrorist attack or armed conflict could harm our business
15. 15We believe Pogo currently has ineffective internal control over its financial reporting
16. 16We are dependent upon our executive officers and directors and their departure could adversely affect our ability to operate
17. 17Our executive officers and directors are, or may in the future become, affiliated with entities that are engaged in business activities similar to our own
18. 18Our executive officers, directors, security holders and their respective affiliates may have competitive pecuniary interests that conflict with our interests
19. 19Increased costs of capital could adversely affect our business
20. 20Pogo may be involved in legal proceedings that could result in substantial liabilities

Risks Related to Our Industry

1. 21If commodity prices decrease to a level such that our future undiscounted cash flows from its properties are less than their carrying value, Pogo may be required to take write-downs of the carrying values of its properties
2. 22The unavailability, high cost or shortages of rigs, equipment, raw materials, supplies or personnel may restrict or result in increased costs to develop and operate our properties
3. 23The marketability of crude oil and natural gas production is dependent upon transportation and processing and refining facilities, which Pogo cannot control. Any limitation in the availability of those facilities could interfere with our ability to market its production and could harm our business
4. 24Drilling for and producing crude oil and natural gas are high-risk activities with many uncertainties that may materially adversely affect our business, financial condition, results of operations and cash flows
5. 25Competition in the crude oil and natural gas industry is intense, which may adversely affect our ability to succeed
6. 26A deterioration in general economic, business, political or industry conditions would materially adversely affect our results of operations, financial condition and cash flows
7. 27Conservation measures, technological advances and increasing attention to ESG matters could materially reduce demand for crude oil and natural gas, availability of capital and adversely affect our results of operations

Risks Related to Environmental and Regulatory Matters

1. 28Pogo must also comply with laws and regulations prohibiting fraud and market manipulations in energy markets. To the extent our properties are shippers on interstate pipelines, they must comply with the tariffs of those pipelines and with federal policies related to the use of interstate capacity
2. 29Federal and state legislative and regulatory initiatives relating to hydraulic fracturing could cause Pogo to incur increased costs, additional operating restrictions or delays and have fewer potential development locations
3. 30Restrictions on the ability of to obtain water may have an adverse effect on our financial condition, results of operations and cash flows
4. 31Our operations are subject to a series of risks arising from climate change
5. 32Increased attention to ESG matters and conservation measures may adversely impact our business
6. 33Our results of operations may be materially impacted by efforts to transition to a lower-carbon economy
7. 34Separately, banks and other financial institutions, including investors, may decide to adopt policies that restrict or prohibit investment in, or otherwise funding, Pogo based on climate change-related concerns, which could affect its or our access to capital for potential growth projects
8. 35Additional restrictions on development activities intended to protect certain species of wildlife may adversely affect our ability to conduct development activities
9. 36Recently, there have also been renewed calls to review protections currently in place for the dunes sagebrush lizard, whose habitat includes parts of the Permian Basin, and to reconsider listing the species under the ESA

Risks Related to Our Financial and Debt Arrangements

1. 37Restrictions in our current and future debt agreements and credit facilities could limit our growth and our ability to engage in certain activities
2. 38If we are unable to comply with the restrictions and covenants in our debt agreements, there could be an event of default under the terms of such agreements, which could result in an acceleration of repayment
3. 39Our debt levels may limit our flexibility to obtain additional financing and pursue other business opportunities
4. 40Our borrowings under the Term Loan Agreement expose us to interest rate risk

Risks Related to Our Common Stock

1. 41Our stock price is volatile, which could result in substantial losses to investors and litigation
2. 42The sale or availability for sale of substantial amounts of our Class A Common Stock could adversely affect the market price of our Class A Common Stock
3. 43We have never paid cash dividends on our Class A Common Stock and do not anticipate paying any cash dividends on our Class A Common Stock
4. 44If equity research analysts do not publish research or reports about our business, or if they issue unfavorable commentary or downgrade our Class A Common Stock, the market price of our Class A Common Stock will likely decline
5. 45The NYSE American may delist our securities from trading on its exchange, which could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions
6. 46We may redeem your public warrants prior to their exercise at a time that is disadvantageous to you, thereby making such warrants worthless
7. 47Purchases made pursuant to our ELOC Purchase Agreement will be made at a discount to the volume weighted average price of Class A Common Stock, which may result in negative pressure on the stock price following the Closing of the Purchase
8. 48It is not possible to predict the actual number of shares of Class A Common Stock, if any, we will sell under the ELOC Purchase Agreement with White Lion or the actual gross proceeds resulting from those sales
9. 49The sale and issuance of Class A Common Stock to White Lion will cause dilution to our existing securityholders, and the resale of the Class A Common Stock acquired by White Lion, or the perception that such resales may occur, could cause the price of our Class A Common Stock to decrease
10. 50Investors who buy shares at different times will likely pay different prices than White Lion under the ELOC Purchase Agreement with them
11. 51Management will have broad discretion as to the use of the proceeds from the sale of shares to White Lion, and uses may not improve our financial condition or market value
12. 52The JOBS Act permits “emerging growth companies” like us to take advantage of certain exemptions from various reporting requirements applicable to other public companies that are not emerging growth companies
13. 53We cannot predict if investors will find our Class A Common Stock less attractive because we will rely on these exemptions. If some investors find our Class A Common Stock less attractive as a result, there may be less active trading market for our Class A Common Stock and our stock price may be more volatile
14. 54The Second A&R Charter contains a waiver of the corporate opportunities doctrine for our directors and officers, and therefore such persons have no obligations to make opportunities available to us
15. 55We are a holding company with no operations of our own, and we depend on our subsidiaries for cash to fund all of our operations, taxes and other expenses and any dividends that we may pay