HNR Acquisition Corp Announces 2024 Operational Plan; Increase In Production Expected In 2024; Cost Control And Optimizing Production To Increase Revenues And Earnings
HNR Acquisition Corp (NYSE:HNRA) (the "Company" or "HNRA") is an independent oil and gas company focused on the acquisition, development, exploration and production of oil and gas properties in the Permian Basin. Over 45 days ago, the Company completed the acquisition of its interest in the Grayburg-Jackson oil field in Eddy County, New Mexico. The field operates 550 oil and gas wells on 13,700 contiguous acres.
The Grayburg-Jackson field began development in the 1940's and in 2020 started to waterflood the Seven Rivers ("7R") interval with good results. The revenues have grown ever since 2020 and the field has been profitable with positive cash flow for the last two years. LH Operating, LLC ("LHO"), a wholly owned subsidiary in the Company structure acquired in November 2023, had $20.3 million of revenues generating positive cash flow and $3.9 million of net income for the nine months ended September 30, 2023. These results included the historical lift costs of $17.00 per barrel. With the acquisition now completed, HNRA will report its first consolidated financials for the fiscal year ended December 31, 2023, which will include results from the acquisition for six weeks of the fourth quarter.
HNRA has performed an initial analysis of the field in conjunction with the results of the pilot study and subsequent actions. To improve capital expenditure efficiency the Company intends to fine-tune its 7R waterflood completions and pumping methods. The Company believes this approach has a high probability of success.
"After approximately 45 days of operating the field, our management team found many areas where we believe we can enhance oil production, as well as numerous financial opportunities we expect to increase our profitability," stated Dante Caravaggio, President and CEO of HNRA. "We anticipate that by reducing our idle well count from 120 to 90 with simple downhole repairs or surface repairs, we can increase production by approximately 100 barrels of oil per day at minimal cost."
"We are fine-tuning our four new well workovers, with production to begin shortly," stated Jesse Allen, Vice President of Operations. "Our team has started maintenance and repairs on a producing facility to reduce flaring and carbon emissions, as well as reduced wellhead back pressure on several wells. We have already improved and increased water recycling to aid the Seven River waterflood by improving the reliability of water treatment/reinjection, and we have improved consistency and increased water injection rates to stimulate additional oil production."
"We made great gains in our initial management of the field, and we will take advantage to improve our oil production and economics. We have also identified ten low-cost opportunities to increase and improve oil production, which will enhance our financial position. Our goals will help us achieve the highest return with a fast payout for our company and to shareholders", continued Jesse Allen.
"We are actively working to "harden" our mechanical and electrical systems to reduce downtime, and to improve safety and reliability", concluded Caravaggio.