EON Resources (NYSEAMERICAN:EONR) said it has returned to compliance with its Securities and Exchange Commission filing requirements and is targeting production growth through drilling, waterflood expansion, well reactivations and potential acquisitions.
During its second-quarter 2026 earnings call, Chief Executive Officer and President Dante Caravaggio said the company owns the approximately 15,000-acre Grayburg-Jackson Field in Eddy County, New Mexico, and the roughly 5,000-acre South Justis Field in Lea County, New Mexico. He described the properties as having multiple productive intervals and a mix of conventional and unconventional development opportunities.
Caravaggio said EON intends to focus on expanding proved developed producing, or PDP, reserves. The company currently has roughly $35 million of PDP production value and about 50 million shares outstanding, according to his remarks. He said EON’s 2027 objective is to increase PDP reserve value to more than $100 million through drilling, acquisitions and waterflood projects.
Horizontal Wells Enter Early Flowback Stage
Jesse Allen, EON’s vice president of operations, said production from the Grayburg-Jackson and South Justis fields was approximately 900 gross barrels of oil per day. The company has also restored some inactive wells, which Allen estimated contributed about 60 barrels per day of production.
EON’s drilling partner began operations on the San Andres horizontal program in mid-August. Allen said the first horizontal well encountered high water flow and pressure at about 750 feet, leading the operator to plug the well as a precaution. However, the Skelly Unit 2H and Skelly Unit 3H wells were drilled without major issues and began production on Oct. 13.
The two wells were still recovering frac water at the time of the call. Allen said each well had about 30,000 barrels of load water to recover and that management expected initial oil production around mid-November, with potential peak rates by the end of November. EON’s internal expectation is for production of 400 to 500 barrels of oil per day per well, though Allen cautioned that timing and results could vary.
The company expects to resume its horizontal drilling program in the first quarter of 2027, subject to the performance of the initial wells. Allen said EON’s drilling partner has been advancing permitting work and the company does not anticipate permitting constraints on future development. The plugged well is expected to be replaced by a carried program well in 2027.
South Justis Development and Waterflood Plans
EON is also marketing the South Justis Field to prospective drilling partners. Allen said the company’s technical team has completed its analysis of the Blinebry, Tubb and Drinkard intervals in the Yeso formation and believes the field has stronger rock properties than Grayburg-Jackson.
The company estimates room for 21 horizontal wells at South Justis, with lateral lengths ranging from about 2,600 feet to more than 13,000 feet and an average lateral length of more than 8,400 feet. Allen said the company expects average recoveries of about 107 barrels of oil per foot, based on its internal analysis. He said interest from potential drilling partners has been high, though prospective partners are conducting their own technical reviews.
For 2027, EON plans to develop 10 Seven Rivers waterflood patterns at Grayburg-Jackson. Allen estimated capital spending of about $2.5 million for the project and an expected production increase of about 250 barrels per day. At South Justis, EON plans to reactivate 25 idle or inactive wells, also with estimated capital spending of $2.5 million and an expected production increase of about 240 barrels per day.
Allen said EON’s internal reserve assessment estimates more than 40 million barrels of reserves across its assets, with a value exceeding $400 million. Caravaggio emphasized that the estimate includes unproven and non-producing reserves, and said the company’s goal is to convert more of those reserves into PDP reserves.
Filings, Debt Reduction and Financing Strategy
Chief Financial Officer Mitch Trotter said EON is current on its filings and expects to file its third-quarter report on time. He attributed the prior delays to the complexity of transactions completed during 2025, including the September 2025 recapitalization, the South Justis acquisition, royalty transactions, debt eliminations and more than 100 conversions involving notes and warrants.
Trotter said the company found no fundamental flaws in its processes or internal controls and no fraud, theft or questionable practices. EON has hired a national adviser and other consultants to improve its systems and prepare for complex transactions earlier in the process, he said.
He said revenue has trended higher alongside oil prices, while production has remained stable quarter to quarter. Trotter also noted that non-cash derivatives have created significant fluctuations in reported revenue and expenses. He said EON recorded a $3.3 million non-cash revenue impact when oil prices rose from $57 at the end of December to $101 at the end of March, followed by a $2.2 million pickup as oil prices fell to $69 by the end of June.
According to Trotter, EON reduced debt to $6 million from $42 million year over year. Senior debt, preferred shares and Class B stock have been eliminated, he said. Cash increased from the first quarter to the second quarter and was expected to rise again in the third quarter.
EON has hedged about $950,000 per month of Grayburg-Jackson production through the end of 2027 to cover basic operating needs, Trotter said. Incremental production growth and South Justis production remain unhedged. He added that future bank financing could require additional hedging.
Caravaggio said EON intends to finance growth primarily through term overriding royalties, traditional debt, possible asset-backed financing and, potentially, equity issuance if market conditions improve. He said the company seeks to avoid issuing stock at low prices and pledged that management would aim to add $2 of PDP value for each share issued.
About EON Resources (NYSEAMERICAN:EONR)
EON Resources, Inc is an independent oil and natural gas company focused on the acquisition, development, exploration and production of onshore energy properties in the United States.
The company’s operations are centered in the Permian Basin, a major hydrocarbon-producing region covering parts of West Texas and southeastern New Mexico. Its activities include developing and operating oil and natural gas wells and managing producing properties.
EON Resources generates its products primarily from crude oil, natural gas and related hydrocarbon production.
