EON Resources announces upgraded Enstream Capital funding LOI

EON Resources (EONR) announces the signing of an expanded non-binding Letter of Intent with Enstream Capital Management for $52.8 million in a revenue sharing and volumetric funding arrangement. The company expects to close on this funding by end of June 2025. The VMA capital will be utilized in three ways: $22 million to satisfy the Seller consideration, which will reap approximately $40 million in net shareholder value through agreed concessions of the Seller. The summary of the Agreement with Seller can be found on the EON website at Seller Agreement Press Release. $21 million to satisfy the net remaining pay-off of the senior reserve-based loan, which was originally $28 million on the acquisition date of the operating company in November 2023. $9.8 million for low-cost workovers of up to 45 wells on the Company’s 13,700 leasehold acres in Eddy County, New Mexico. Benefits of using VMA capital instead of debt or equity: Improves our monthly cash flow by over $250,000 per month, or $3 million a year. The RBL amortization payment is reduced by $700,000 and replaced by the VMA payment of approximately $450,000. No dilution to our common stock. Reduces major debt on our balance sheet by $40 million, which is more than $2.00 a share. Insulates EON from oil price risk as payments to Enstream are based on percentage revenue and not a fixed dollar amount. The ORRI reverts to EON after the contractual cash on cash payout via an option to buy-back the ORRI at a minimal amount. Minimizes/reduces default risk by not being a traditional loan, and as the payments are based on a percentage revenue. Provides capital to expand and develop untapped proven, but not developed, reserves. The LOI has a clause to exclude the drilling of new wells from the ORRI structure so that the Company can maximize the benefits of the planned horizonal drilling program in the San Andres interval as described in a press release on February 26, 2025 located at Horizonal Drilling Program Press Release. The balance sheet will be improved when final funding structure and GAAP accounting determines the impacts to debt reduction, minority interest and equity, and the asset value. Closing on the VMA, or an alternate financing arrangement, consummates the benefits of the agreement with the seller. Key benefits are: reduction of $40 million of obligations from the balance sheet; reduced number of shares to be issued for the preferred stock obligations; and reducing our net purchase price from an original $120 million to less than $60 million. The benefits are further described in the press release dated February 11, 2025 located at Seller Agreement Press Release, and the letter to our shareholders on March 12, 2025 located at EON Shareholder Letter.