EON Resources Reaches Preliminary $52.8 Million Deal, Analyst Highlights Value Creation Potential

EON Resources Inc. EONR shares are trading lower on Wednesday. Boral Capital analyst Jesse Sobelson maintained the price forecast of $4.50 and a Buy rating.

The analyst stated that they recently spoke with Eon Resources following the signing of an expanded non-binding Letter of Intent (LOI) with Enstream Capital Management.

The LOI is for a $52.8 million revenue sharing and volumetric funding arrangement (VMA), with funding expected to close by the end of June 2025.

VMA capital will be used to pay $22 million to the seller, unlocking ~$40 million in shareholder value, retire the remaining $21 million of the original $28 million reserve-based loan, and invest $9.8 million in low-cost workovers for up to 45 wells across 13,700 acres in Eddy County, New Mexico.

Sobelson notes that the new Overriding Royalty Interest (ORRI) will be recorded as a contingent liability, tied to active operations.

This structure enhances EONR's future operational flexibility while reducing financing costs, adds the analyst.

The analyst says that they await the company's delayed 10-K filing, postponed due to complexities related to recent transactions, and continue to model actuals through third-quarter FY24 only.

Yesterday, EON Resources disclosed that its contractual hedging program provides downside protection by mitigating oil price risk through the end of calendar year 2025.

Roughly 70% of oil production is hedged at fixed prices ranging from $70.10 to $70.50 per barrel, with volumes and prices locked in for the next nine months.

Price Action: EONR shares are down 5% at $0.48 at the last check Wednesday.

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