EONR 8-K
EON Resources Inc. (EONR)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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Item 1.01. Entry into a Material Definitive Agreement
As previously disclosed, on October 17, 2022, HNR Acquisition Corp, a Delaware corporation (the “Company”), and its subsidiaries (for purposes of the Loan Agreement, together with the Company, the “Loan Parties”) entered into a Senior Secured Term Loan Agreement on November 15, 2023 (the “Loan Agreement”) with First International Bank & Trust (“FIBT” or “Lender”), setting forth the terms of a senior secured term loan facility in an aggregate principal amount of $28 million (the “Term Loan”).
On April 18, 2024, the Loan Parties and FIBT entered into a Second Amendment to Term Loan Agreement (the “Amendment”) effective as of March 31, 2024. Pursuant to the Amendment, the Loan Agreement was modified to provide that the Company must, on or before December 31, 2024, deposit funds in a Debt Service Reserve Account (as defined in the Loan Agreement) such that the balance of the account equals $5,000,000 and FIBT waived the provision that such amount had to be deposited within 60 days of the closing date of the Loan Agreement. In addition, the Amendment provides that, if at any time prior to December 31, 2024, the Company or any of its affiliates enter into a sale leaseback transaction with respect to any of its equipment, the Company will deposit an amount equal to the greater of (A) $500,000 or (B) 10% of the proceeds of such transaction into the Debt Service Reserve Account on the effective date of such sale and leaseback transaction.
The foregoing description of the Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of the Amendment, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated by reference herein.
Item 3.01. Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing
On April 17, 2024, the Company received a notice (the “NYSE Notice”) from the NYSE American LLC (the “NYSE American”) that the Company is not in compliance with NYSE American listing standards as a result of its failure to timely file its Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (the “Form 10-K”) with the Securities and Exchange Commission (the “SEC”).
The NYSE Notice has no immediate effect on the listing of the Company’s Class A Common Stock (NYSE American: HNRA) or the Company’s public warrants (NYSE American: HNRAW) on the NYSE American. The NYSE Notice informed the Company that, under NYSE American rules, the Company has six months from April 16, 2024 to regain compliance with the NYSE American listing standards by filing the Form 10-K with the SEC. If the Company fails to file the Form 10-K within the six-month period, the NYSE American may grant, in its sole discretion, an extension of up to six additional months for the Company to regain compliance, depending on the specific circumstances. The NYSE Notice also notes that the NYSE American may nevertheless commence delisting proceedings at any time if it deems that the circumstances warrant.
As previously reported in the Company’s Notification of Late Filing on Form 12b-25 filed with the SEC on April 2, 2024 (the “Form 12b-25”), the Company was unable to file the Form 10-K within the prescribed period because additional time, resources and effort are required to complete work related to its financial reporting and close procedures. Subsequent to filing the Form 12b-25, the Company continued to dedicate significant resources to the completion of such procedures but was unable to file the Form 10-K by April 16, 2024, the end of the extension period provided by the Form 12b-25. The Company requires additional time to complete such procedures.
The Company is working diligently to complete the necessary work to file the Form 10-K as soon as practicable and currently expects to file the Form 10-K within the six-month period granted by the NYSE Notice; however, there can be no assurance that the Form 10-K will be filed within such period.
On April 23, 2024, the Company issued a press release regarding receipt of the NYSE Notice, among other items. The press release is filed as Exhibit 99.1 hereto and is hereby incorporated by reference into this Item 3.01.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
The following exhibits are being filed herewith:
| Exhibit Number | Description | |
| 10.1 | Second Amendment to Term Loan Agreement dated April 18, 2024, effective March 31, 2024. | |
| 99.1 | Press Release of the Company dated April 23, 2024. | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| April 23, 2024 | HNR Acquisition Corp | |
| By: | /s/ Mitchell B. Trotter | |
| Name: | Mitchell B. Trotter | |
| Title: | Chief Financial Officer | |
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Exhibit 10.1
Execution Version
SECOND AMENDMENT TO TERM LOAN AGREEMENT
THIS SECOND AMENDMENT TO TERM LOAN AGREEMENT (this “Amendment”) is entered into as of April 18, 2024, but effective as of March 31, 2024 (the “Amendment Effective Date”), by and among HNR ACQUISITION CORP, a Delaware corporation (“Borrower”), HNRA UPSTREAM, LLC, a Delaware limited liability company, HNRA PARTNER, INC., a Delaware corporation, POGO RESOURCES, LLC, a Texas limited liability company, and LH OPERATING, LLC, a Texas limited liability company (each as a “Guarantor”), and FIRST INTERNATIONAL BANK & TRUST, a North Dakota state banking institution (“Lender”).
W I T N E S S E T H:
WHEREAS, Borrower, Lender and the Guarantors are parties to that certain Senior Secured Term Loan Agreement dated as of November 15, 2023, as amended by that certain Amendment to Term Loan Agreement dated as of December 20, 2023 (as further amended, restated, supplemented or otherwise modified from time to time prior to the date hereof, the “Existing Term Loan Agreement”, and as amended by this Amendment and as further amended, restated, supplemented or otherwise modified from time to time, the “Term Loan Agreement”), whereby upon the terms and conditions therein Lender has agreed to make certain loans to Borrower;
WHEREAS, Borrower has requested that Lender waive certain requirements for deposit of funds in the Debt Service Reserve Account and amend the Existing Term Loan Agreement as set forth below; and
WHEREAS, subject to the terms and conditions hereof, Lender is willing to agree to the waivers and amendments to the Existing Term Loan Agreement as set forth herein.
NOW, THEREFORE, for and in consideration of the mutual covenants and agreements herein contained, the parties to this Amendment hereby agree as follows:
SECTION 1. Definitions. Unless otherwise defined in this Amendment, each capitalized term used herein but not otherwise defined herein has the meaning given such term in the Term Loan Agreement. The interpretive provisions set forth in Section 1.3 of the Term Loan Agreement shall apply to this Amendment.
SECTION 2. Waivers to Existing Term Loan Agreement. Borrower has requested and Lender has agreed to waive, effective on the Amendment Effective Date, Borrower’s obligation under Section 2.8(a) of the Existing Term Loan Agreement to deposit funds in the Debt Service Reserve Account such that the balance of the account equals $5,000,000 within 60 days following the Closing Date of the Existing Term Loan Agreement.
SECTION 3. Amendments to Existing Term Loan Agreement. Effective on the Amendment Effective Date, Section 2.8(a) of the Existing Term Loan Agreement is hereby deleted in its entirety and replaced with the following:
“(a) (i) On the Closing Date, Borrower shall deposit at least $2,600,000 into the Debt Service Reserve Account, (ii) if at any time prior to December 31, 2024, Borrower or any of its Affiliates enters into a sale leaseback transaction with respect to any of its equipment (which, for the avoidance of doubt, is subject to the consent of the Lender), Borrower will deposit an amount equal to the greater of (A) $500,000 or (B) 10% of the proceeds of such transaction into the Debt Service Reserve Account on the effective date of such sale and leaseback transaction, and (iii) on or before December 31, 2024, Borrower shall deposit such additional amounts such that the balance of the Debt Service Reserve Account shall be equal to $5,000,000 at all times thereafter.”
SECTION 4. Conditions of Effectiveness. This Amendment shall become effective as of the Amendment Effective Date, subject to satisfaction of each of the following conditions precedent (or waiver in accordance with Section 10.1 of the Term Loan Agreement):
(a) Lender shall have received, in form and substance satisfactory to Lender, a counterpart of this Amendment which shall have been executed by Lender, each Guarantor and Borrower (which may be by PDF transmission);
(b) Lender shall have received, in form and substance satisfactory to Lender, a fully executed copy of the Sale/Lease Agreement which shall have been executed by Borrower and Equipment Lessor and a copy of any security interests recorded by Equipment Lessor in connection therewith (which copies may be by PDF transmission);
(c) Lender shall have received, in form and substance satisfactory to Lender, counterparts of the Collateral Assignment which shall have been executed by Lender, Borrower and Equipment Lessor (which may be by PDF transmission);
(d) Borrower shall have paid Lender’s reasonable and documented counsel fees and expenses incurred in negotiation and preparation of this Amendment, and for estimated fees charged by filing officers and other public officials incurred or to be incurred in connection with filing any recordation of any partial release of any Security Documents and for which invoices have been presented as of the Closing Date pursuant to Section 10.7(a) of the Term Loan Agreement; and
(e) each of the representations and warranties set forth in Section 5 of this Amendment shall be true and correct.
SECTION 5. Representations and Warranties. Borrower represents and warrants to Lender, with full knowledge that Lender is relying on the following representations and warranties in executing this Amendment, as follows:
(a) It has the organizational power and authority to execute, deliver and perform this Amendment, and all organizational action on the part of it requisite for the due execution, delivery and performance of this Amendment has been duly and effectively taken.
(b) The Term Loan Agreement, the Loan Documents and each and every other document executed and delivered to Lender in connection with this Amendment to which Borrower or any other Loan Party is a party constitute the valid and binding obligations of Borrower and such Loan Party, as applicable, enforceable against Borrower and such Loan Party, as applicable, in accordance with their respective terms except as enforceability may be limited by applicable bankruptcy, insolvency, or similar laws affecting the enforcement of creditors’ rights generally or by equitable principles relating to enforceability.
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(c) This Amendment does not and will not violate any provisions of any bylaws, limited liability company agreement or other organizational and governing documents of Borrower or any other Loan Party.
(d) No consent or approval of, registration or filing with, or any other action by, any Governmental Authority, except those as have been obtained or made and are in full force and effect, and except for filings necessary to perfect or maintain perfection of the Liens created under the Loan Documents, is required in connection with the execution, delivery or performance by, or enforcement against, Borrower or any other Loan Party of this Amendment.
(e) Immediately after giving effect to this Amendment, the representations and warranties of Borrower and each other Loan Party contained in Article V of the Term Loan Agreement or in any other Loan Document are true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof), except that any representation and warranty which by its terms is made as of a specified date shall be required to be so true and correct in all material respects only as of such specified date.
(f) Immediately after giving effect to this Amendment, no Default or Event of Default shall exist and be continuing.
(g) Since November 15, 2023, no Material Adverse Change has occurred and is continuing or could reasonably be expected to have occurred and be continuing.
SECTION 6. Miscellaneous.
(a) Reference to the Term Loan Agreement. Upon the effectiveness hereof, on and after the Amendment Effective Date, each reference in the Term Loan Agreement to “this Agreement,” “hereunder,” “hereof,” “herein,” or words of like import, shall mean and be a reference to the Existing Term Loan Agreement as amended hereby.
(b) Effect on the Term Loan Agreement; Ratification. Except as specifically amended or modified by this Amendment, the Existing Term Loan Agreement shall remain in full force and effect and is hereby ratified and confirmed. By its acceptance hereof, Borrower hereby ratifies and confirms each Loan Document to which it is a party in all respects, after giving effect to the amendments set forth herein.
(c) Extent of Amendments. Except as otherwise expressly provided herein, the Existing Term Loan Agreement and the other Loan Documents are not amended, modified or affected by this Amendment. Borrower hereby ratifies and confirms that (i) except as expressly amended or modified hereby, all of the terms, conditions, covenants, representations, warranties and all other provisions of the Existing Term Loan Agreement remain in full force and effect, (ii) each of the other Loan Documents are and remain in full force and effect in accordance with their respective terms, and (iii) the Collateral and the Liens on the Collateral securing the Obligations are unimpaired by this Amendment and remain in full force and effect.
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(d) Loan Documents. The Loan Documents, as such may be amended or modified in accordance herewith, are and remain valid and binding obligations of the parties thereto, enforceable in accordance with their respective terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by general principles of equity. This Amendment is a Loan Document.
(e) Claims. As additional consideration to the execution, delivery, and performance of this Amendment by the parties hereto and to induce Lender to enter into this Amendment, Borrower represents and warrants that, as of the date hereof, it does not know of any defenses, counterclaims or rights of setoff exercisable by it or any other Loan Party, except pursuant to the terms of the Term Loan Agreement and Loan Documents, if any, to the payment of any Obligations of Borrower or any other Loan Party to Lender.
(f) Execution and Counterparts. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same instrument. Delivery of an executed counterpart of this Amendment by facsimile or PDF shall be equally as effective as delivery of a manually executed counterpart.
(g) Governing Law. This Amendment and any claims, controversy, dispute or cause of action (whether in contract or tort or otherwise) based upon, arising out of or relating to this Amendment and the transactions contemplated hereby and thereby shall be construed in accordance with and be governed by the law (without giving effect to the conflict of law principles thereof) of the State of North Dakota.
(h) Headings. Section headings in this Amendment are included herein for convenience and reference only and shall not constitute a part of this Amendment for any other purpose.
SECTION 7. NO ORAL AGREEMENTS. THE RIGHTS AND OBLIGATIONS OF EACH OF THE PARTIES TO THE LOAN DOCUMENTS SHALL BE DETERMINED SOLELY FROM WRITTEN AGREEMENTS, DOCUMENTS, AND INSTRUMENTS, AND ANY PRIOR ORAL AGREEMENTS BETWEEN SUCH PARTIES ARE SUPERSEDED BY AND MERGED INTO SUCH WRITINGS. THIS AMENDMENT AND THE OTHER WRITTEN LOAN DOCUMENTS EXECUTED BY BORROWER, THE OTHER LOAN PARTIES, AND/OR LENDER REPRESENT THE FINAL AGREEMENT BETWEEN SUCH PARTIES, AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY SUCH PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN SUCH PARTIES.
SECTION 8. No Waiver. Borrower hereby agrees that except to the extent waived herein, no Event of Default and no Default has been waived or remedied by the execution of this Amendment by Lender. Nothing contained in this Amendment (a) shall constitute or be deemed to constitute a waiver of any Defaults or Events of Default which may exist under the Term Loan Agreement or the other Loan Documents, or (b) shall constitute or be deemed to constitute an election of remedies by Lender, or a waiver of any of the rights or remedies of Lender provided in the Term Loan Agreement, the other Loan Documents, or otherwise afforded at law or in equity.
Signatures Pages Follow
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written.
| HNR ACQUISITION CORP, | |||
| as Borrower | |||
| By: | /s/ David M. Smith | ||
| Name: | David M. Smith | ||
| Title: | Secretary | ||
| HNRA UPSTREAM, LLC, | |||
| as Guarantor | |||
| By: | /s/ David M. Smith | ||
| Name: | David M. Smith | ||
| Title: | Secretary | ||
| HNRA PARTNER, INC., | |||
| as Guarantor | |||
| By: | /s/ David M. Smith | ||
| Name: | David M. Smith | ||
| Title: | Secretary | ||
| POGO RESOURCES, LLC, | |||
| as Guarantor | |||
| By: | /s/ David M. Smith | ||
| Name: | David M. Smith | ||
| Title: | Secretary | ||
| LH OPERATING, LLC, | |||
| as Guarantor | |||
| By: | /s/ David M. Smith | ||
| Name: | David M. Smith | ||
| Title: | Secretary | ||
| FIRST INTERNATIONAL BANK & TRUST, | |||
| as Lender | |||
| By: | /s/ Mitchell Cook | ||
| Name: | Mitchell Cook | ||
| Title: | Market President, Twin Cities | ||
Signature Page to Second Amendment to Term Loan Agreement
Exhibit 99.1
HNR Acquisition Corp Announces
Notice of Failure to Satisfy a Continued Listing Rule or Standard
HOUSTON, TX / April 23, 2024 / HNR Acquisition Corp (NYSE American: HNRA) (the “Company” or “HNRA”) is an independent upstream energy company.
On April 17, 2024, the Company received a notice (the “NYSE Notice”) from the NYSE American LLC (the “NYSE American”) that the Company is not in compliance with NYSE American listing standards as a result of its failure to timely file its Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (the “Form 10-K”) with the Securities and Exchange Commission (the “SEC”).
The NYSE Notice has no immediate effect on the listing of the Company’s Class A Common Stock (NYSE American: HNRA) or the Company’s public warrants (NYSE American: HNRAW) on the NYSE American. The NYSE Notice informed the Company that, under NYSE American rules, the Company has six months from April 16, 2024, to regain compliance with the NYSE American listing standards by filing the Form 10-K with the SEC. If the Company fails to file the Form 10-K within the six-month period, the NYSE American may grant, in its sole discretion, an extension of up to six additional months for the Company to regain compliance, depending on the specific circumstances. The NYSE Notice also notes that the NYSE American may nevertheless commence delisting proceedings at any time if it deems that the circumstances warrant.
As previously reported in the Company’s Notification of Late Filing on Form 12b-25 filed with the SEC on April 2, 2024 (the “Form 12b-25”), the Company was unable to file the Form 10-K within the prescribed period because additional time, resources and effort are required to complete work related to its financial reporting and close procedures. Subsequent to filing the Form 12b-25, the Company continued to dedicate significant resources to the completion of such procedures but was unable to file the Form 10-K by April 16, 2024, the end of the extension period provided by the Form 12b-25. The Company requires additional time to complete such procedures.
The Company is working diligently to complete the necessary work to file the Form 10-K as soon as practicable and currently expects to file the Form 10-K within the six-month period granted by the NYSE Notice; however, there can be no assurance that the Form 10-K will be filed within such period.
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, now 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 HNR Acquisition Corp
HNRA 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. HNRA’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.
HNRA’s Class A Common Stock and Warrants trade on the NYSE American Stock Exchange (NYSE American: HNRA and HNRAW, respectively). For more information on HNRA, please visit the Company website: https://www.hnra-nyse.com/
Forward-Looking Statements
This press release includes “forward-looking statements” 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.
Investor Relations
Michael J. Porter, President
PORTER, LEVAY & ROSE, INC.