EON Resources Inc. ($EONR)

Greetings. Welcome to the EON Resources, Inc. Earnings Conference Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to your host, Michael Porter, Investor Relations. You may begin.

Thank you, Matthew. Good afternoon, ladies and gentlemen, and welcome to the Resources, Inc. Year-end Earnings Call. This press release that we put out in the last day includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involves risks and uncertainty that could cause actual results to differ materially from what is expected. Words such as expect, believe, anticipate, intend, should and variations and similar words and expressions are intended to identify such forward-looking statements. These 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, our future results based on current available information, and reflected in the company's management and current beliefs. All actual results may differ materially from the company's expectations are disclosed in the company's documents filed from time to time on EDGAR and with the Securities and Exchange Commission. I'd now like to turn the call over to Dante. Dante, you may go ahead.

Thank you, Michael. Thank you, Matt, and thank you for the audience that we have out there. At last count, it sounded like we got close to 50 participants on. So thank you all for joining us. The outline of today's call is really going to be the agenda. I'll cover that. And the agenda will include: we're going to start with the status of the 10-K, which you don't have. So I'll divert to our CFO, my goodness, how can I not remember Mitchell. So Mitchell, and then I'll give the overview, then the financials by Mitch, then operations by Jesse, then I'll give the summary, then we'll go to Q&A. So I'm going to start this off by first calling on our CFO, Mitch Trotter, to explain what the status is of our 10-K, please.

Sure. Thanks, Dante. And I wasn't going to start with a joke, but I'll start with, I'm Mitch Trotter, the CFO, just so Dante knows. Anyway. I want to take a minute on the 10-Ks. The 2024 and the 2025 10-Ks, they have taken a little extra time because of the complexities of various instruments that resulted from EON's most two significant events in time: the November '23 acquisition of Grayburg-Jackson Field and the September 9 recapitalization and farmout agreement funding. Both of those were transformational days, but they came with a lot of complex instruments and very complicated GAAP treatments and sometimes each one had multiple possible GAAP treatments. So first, the 2024 10-K has been refiled. It was done last Friday. It's all done. The 2025 10-K is nearly ready to file, but we're finalizing the review of the GAAP treatments and the very complicated tax treatments as well. But do note, operational results, cash, they weren't impacted by all this. So later, when it gets to the financials, I'll talk about the underlying numbers, which tell a good story for EON. But right now, I'm going to turn it back over to Dante and I'll address those items later. Back to you, Dante.

Okay. I'm going to cover the summary points I think that everybody should be taking away from this call. Number one, 2025 was an outstanding year for us. The balance sheet, more than anything else, reflects that. We raised $45 million in September. We paid off $68 million in debt and obligations, and we realized a gain of $14 million. Those things alone made it an outstanding year. Couple that with we signed a farmout agreement with the Virtus guys based in Dallas. And thanks to all of them, led by Lance Taylor, that added 92 horizontal wells to our drilling inventory that we have high expectations for. And among those wells, 3 are permitted with the BLM to start drilling in June, and we expect another 10 to be drilled in Q4. In all, to credit EON Resources, we're counting on about 11 million barrels and about $100 million in net present value resulting from that. That growth will continue through the rest of the decade with substantial drilling in '26, '27, '28, and beyond. It was a poor year for oil prices where we were $13 a barrel below 2024. That impacted our PDP reserves, our revenues, our EBITDA, but not severely. A lot of that was mitigated by our hedging position, which allowed us to hold about $70 a barrel. In '26, it goes without saying, prices are way up. We did hedge a lot of '26 and into '27. Some of that's not positive for us because we didn't see oil going all the way to $100. We do see that oil is going to stay up for the balance of this year, and we think it will be elevated into '27. Nobody knows what it's going to be, but the numbers are going to be up. They're going to be substantially up from '25. So with that, I'm going to flip to Page 3, the company overview and the takeaways from that slide. Really, the takeaway here is that we own 2 fields totaling about 1.2 billion barrels, of which we believe 25% is ultimately recoverable and of which 10% has been recovered to date. That leaves us over 150 million barrels that we could recover. A big dent is going to be taken out of those reserves in the San Andres by the Virtus drilling. Those 92 wells are really going to make more of an impact to our company than anything else we're doing. However, the South Justis Field that we bought looks like it's got potential to do the same thing again, to do a farmout down in the [ Blinebry ] formation, and we're just now getting those numbers from our geologists and technical team, and Jesse will talk a little bit about that. So flipping on to the next slide, Page 4, celebrating our '25 successes. As mentioned, we raised $45 million from selling a pair of ORRIs and a $5 million leasehold to Virtus, where we retained a 35% working interest. They have the majority working interest at 65%. We retired and eliminated senior and seller debt. We also eliminated preferred shares that could have had a drastic negative impact to our common share count. That's been reduced or actually eliminated completely. We had a $14 million gain in '25. Some of that's offset because you lose reserves in a year when you have lower oil prices, but then you get the reserves right back in a year like this, '26, where oil shot up. So the farmout agreement, I already captured the key points, 92 horizontal wells in inventory. This 95 number was based on $60 oil. So I'm rounding up $100 million plus impact to shareholders. We purchased the South Justis Field, added 5,300 acres to our holdings, added 207 million barrels. Oil prices in '25, as I mentioned, you lose reserves in a year when oil prices drop, you get them back in a year when the oil prices recover. And I believe that what we did in '25 sets the stage for the rest of the decade to have a doubling and then a doubling again of our EBITDA. So this year, you'll hear those numbers coming out from Mitch in just a minute. Page 5. So poised for growth in '26 and beyond. These elevated oil prices, they already had an impact this month. We saw a $300,000 net increase to our income, and that's after hedging. So we -- in hindsight, we would have said, gee, we would have done better if we didn't hedge, but still the hedging didn't affect that we still made $300,000 more. Horizontal drilling by the farmout agreement, I'm proud to say that the Virtus guys are really ahead of schedule. They've submitted permits to the BLM and to the NMOCD. We've got the BLM approvals. We've got approval back on 5 vertical wells to do vertical well recompletions in the San Andres, and that will give us some data to tell us what's the best way to recomplete these horizontal wells. So the first 3 horizontal wells, along with the vertical well recompletions, we figure, will add 500 net barrels of oil per day. For the year, that should be about 100,000 barrels of net sold barrels to us. And if you add that up and say, "Well, let's multiply that times whatever, $75, $80 a barrel," that's going to be an addition of $8 million to our bottom line. And then in fourth quarter, in talking to the again, the Virtus guys, we had planned on 7 to 10 horizontal wells. If oil prices hang in where they're at, that number will probably be 10 instead of 7. And instead of drilling them in December, that might be in October. So all planning is going toward accelerating these numbers. Other production potential: we had a water injection line down. We talked about that over the last year, a 4-inch line. It's been back in service for most of this year. We're expecting 75 to 100 barrels a day to come as a result of water injection back online. We had some water injection wells down as a result as well. We're looking to get funding for the South Justis Field to put some inactive wells on active production. We think we'll pick up 250 barrels a day there. So with that, I'm going to turn it over to Mitch, who will go into the details of the finances. Mitch?

All right. Thanks. Okay. As you've heard already from Dante and you'll hear throughout, September 9 was a huge event for us, and it will drive a lot of the numbers of this year and actually years to come with the horizontal program. And we'll drill down into the underlying numbers, but you'll see that '24 and '25 are actually very similar. So let's go ahead to the next slide on revenues, please. So on the revenue side, overall production has been stable at 250,000 barrels per year for the last 2 years. Now in dollars, revenues did drop compared to '24, but that's because of a $13 drop in oil price. If you look at the table, you can see that. I've got the average oil prices over time. And as Dante already noted, that uptick in March has already added $300,000 in net revenues to us. And of course, we'll see, hopefully, the $96 and now $100 today, oil price going forward. But our hedging program, it did soften the impact to us in '25, and that's its purpose. Accordingly, we have hedged 75% through the end of next year through end of December '27 for the same reason. But this is just to cover and it covers our hedging -- our lease operating expenses all the way through the end of '27. That's its purpose. That's what we've done. That means all the new production is unhedged, it's naked, and we plan to take advantage of the elevated oil prices. Most oil analysts fielded a forecast of elevated oil prices for a while. So we do expect to reap those benefits. So let's move on to the next slide, please. Drill down a little bit into the operating expenses. You can see that the lease operating expense dropped by or was reduced by $0.5 million over the last year-over-year on the Grayburg-Jackson Field, and that came from improved operational efficiencies by our field team and operations team. So that was a good success by them. And as Dante had noted, the oil price drop -- I think he did -- of $13, it impacted our reserves at the end of '25. Well, under GAAP, that impact, and you'll see when we release the financials, it took a $5 million hit to depletion and depreciation. That's a GAAP thing. But with oil prices higher today, we do expect those reserve reports to recover in '26 to some level, depending on the prices throughout the year. Let's move on to the next slide. So on G&A, just like the lease operating expenses, we focused on reducing costs like we've said we would. And you can see in the table, there's recurring G&A, the ones that we can manage. As we go forward, we can manage the others. But we reduced by net $1 million from '24 to '25. Audit fees are down $500,000. Legal is down $400,000. Consulting did go up $300,000, but that had a lot to do with the fees relating to the September 9 funding, which turned out to be good. Insurance costs, down $400,000. And that really doesn't bake in much of what we renegotiated in Q4 of '25 that will reap the benefits in '26. So I've noted every quarter since we've started the onetime adjustments and nonrecurring items that may be up in G&A from the funding and whatnot. I'm not going to drill down at this point. You'll see that later when we release, but most of it related to the September 9 funding, like everything else. So let's go ahead to the next slide. And this is the below-the-line stuff, as I call it, it's other income and expense. That's where everything else falls. Let me hit the main points. Interest expense dropped $2.7 million from '24 to '25. And that all came from the September 9 funding when we retired all that senior debt, big impact in just 4 months. So that's good for us, obviously. And as Dante noted, we had $13.5 million of gains relating to that September 9 funding. And then we talked about the complex instruments and all the GAAP stuff. I've lumped all that in into GAAP fair market value line. It's derivatives, it's warrants, it's a whole bunch of things, but you can see that impact. And you'll see the detail later. So let's go on to the next slide, the balance sheet. I'm not going to spend a lot of time on the balance sheet at this point. Assets are very similar to what we reported in Q3, so not dramatically different. The big cleanup, as we've stated, Dante stated as well, the liabilities and equity, it's what transformed our balance sheet and put us in a great position going forward. We retired the $21 million of senior debt. We retired our bank debt. We retired the $20 million of the senior note, which included accrued interest. We cleaned up $9.8 million of private loans and warrants that relate to 2023 preacquisition. We did it via convertible notes. And now at the end of '25, we're down to only $2.3 million of that trailing cost. And on the equity side, preferred shares, Class B shares, noncontrolling interest, they're all gone. So with that, I will stop here. Obviously, we'll take questions in the Q&A, if there are any. But I want to move on to Jesse and operations next, please.

Good afternoon. Yes, this is Jesse Allen, VP of Operations for EON Resources and our subsidiary, LH Operating. And so today I'll be talking about the operations at the Grayburg-Jackson Field and the South Justis Fields. So with that, I'd always like to start off with safety. Our operations field operating team has done an excellent job as far as safety, working safely, getting to the location safely, and then going home safely. We want everybody at the end of the day to get home safely. Production is averaged at the Grayburg-Jackson and the South Justis Field a little over 1,000 barrels of oil a day gross. So production is hanging in there. As Dante has mentioned, we did complete a 2-mile injection line replacement there at the Grayburg-Jackson Field, and we should start to see the impact of putting that line back in service with additional oil and gas production. We do -- we're in the process of trying to source funding to return down wells at the South Justis Field back to production. And hopefully, we'll get that accomplished here in the not-too-distant future. And in addition, there at the South Justis Field area, we're analyzing the data, well logs, cores, whatever technical data we can get our hands on to evaluate the horizontal drilling potential there at the South Justis Field. And as Dante has alluded, it looks like we may be able to do the same thing we've done at the Grayburg-Jackson Field as far as horizontal wells and coming to an agreement with a potential investor on doing horizontal wells there. Next slide, please. Now let me go a little bit into the San Andres horizontal drilling program. It's part of the farmout we did with Virtus there in the September 9, 2025 agreement. Currently, we acquired 5 vertical wells that were -- we just started the recompletion of the first one, and it will be in the intervals that we plan to go horizontal. And so this gives us a good confirmation of what to expect with our horizontal wells and to confirm our analysis, both ours in-house and then, of course, Virtus's own analysis. We expect to spud the first 3 horizontal wells -- and when I say spud, I mean start drilling -- should happen maybe early to mid-June. And so we're really looking forward to the start of that program. And then as I always like to say, success breeds success. So we're planning, if that is the case, by the end of 2026 to drill 10 additional horizontal wells. So with that, I'll turn it back over to Dante, and we'll field your questions there at the end. Dante?

Yes. Thanks, Jesse. Why is EON a good long-term investment? First of all, we're all shareholders. So myself, the other members of the management team, the Board of Directors, we're all concerned about the share price. So we don't like to lean on the shares to raise money. We do it when we have to. But right now, where we don't have much debt, we prefer to raise money with debt. We also like, just as we did with the $45 million raise, we did that almost entirely by selling an override in the field. So again, we're trying not to put pressure on the stock price by selling too many shares. However, we do want to acquire properties. We are an acquisition company. We do have an obligation to fund drilling. But so far, we think the debt markets are going to cover most of what we need. So we don't expect to lean too hard on the sale of the stock to dilute the stock. So it's our intention. We were -- at one point when we started this thing back in '23, we were a $10 stock. So we're hell bent to get back there. In '25, we cleaned up the balance sheet. We got rid of really $68 million in debt and obligations, and we did that with $45 million. The horizontal drilling program is going to pay dividends through the rest of the decade. And all of you are going to get to see that. We're going to report the results of these vertical wells. Now these vertical wells, we don't expect them to make 500 barrels a day, but we do expect them to make 50 barrels a day or better. So when we get those results, you're going to see that. Certainly, these 3 wells that we're going to drill in June, you're going to see that. It takes us a month before we know because the wells have to produce back all that sand and frac water and then see what it does once it's all cleaned up. The South Justis Field, we think that's going to be another smaller but similar approach to what we did with Grayburg-Jackson. And the company likes the stock value. We all are buyers of the stock. And as an acquisition company, we are looking to raise money so we can buy another Permian property. And I would tell shareholders, expect something this year on that one. So that's the summary for this. Again, we all apologize, the 10-K is not in your hands. It's nothing that's a big issue. It's purely mechanical. And it was a chore, one that we all underestimated that, that deal we did. It was really a 5-way deal in September, and we sold something. We had no cost basis for us. So we had to have all these accounting scientists to hook up with the Monte Carlo simulation, what is the appropriate price of an ORRI. And all that's just about done. We're hoping that imminently, we'll issue that 10-K. And with that, I'm wrapping it up and I'm going to turn it back over to Mike for Q&A, please.

[Operator Instructions] Your first question is coming from [ Greg Weaver ].

Maybe if you could give me a little more color in terms of I think we'd all like to know about the structure, the details of the volumetric funding you're looking for, for South Justis, and that's 100% discretionary expenditure in your part?

Yes. This is Dante. Yes, we have no debt on that property and the structure that we're looking for is $2.5 million increments to reactivate 25 to 50 wells per tranche. So what we have is about 220 wells there. And to reactivate these wells, we've got enough pumping units to get up to 80 active wells, roughly that number. And then we'll have to buy pumping units to activate the other 120. So what we did was we figured if we could raise $2.5 million, the offer that we've made to several parties is we'll pay that party a 200% return on their investment, and we think that this investment will pay out within a year 200% return on their investment by giving them 50% of our net income until they get their money back and then that override goes away. So we call that a term override. A lot of folks in the market like a permanent override, but what we're trying to do without using stock, without using a loan is to sell a temporary RRI that generates a guaranteed 200% return on your money.

And I guess just on the OpEx front, it sounds like Mitch didn't want to get into it too much, but I assume there's been some onetime stragglers in here. But can you give us a sense of what you foresee as the base run rate to cash OpEx on a go-forward basis on a quarter?

On the lease operating expenses, I'm sorry...

Just G&A I guess we should focus on. I don't want to mix it in with the other.

I'm sorry, you said G&A.

Yes.

Yes, we run about $600,000 a month in G&A, which primarily is salaries and professional fees and insurance. But a chunk of that is also like stock options, RSUs, that's part of it. But you can use $600,000 -- $500,000 to $600,000 of G&A. The pieces that I didn't drill down into were like certain legal reserves that are in a onetime adjustment that came to us with the September 9 financing. There were a bunch of settlement of old agreements that were all equity-based. And that's what I didn't drill down into. And so that's -- I usually do, and I will lay it out there when we release the actual K and drill down into that detail, like I always do every quarter. So I'm not afraid of doing it. It just wasn't appropriate to spend all that time at this moment. Hopefully, that answered your question.

Yes, yes, that's fine. I appreciate that. And just lastly, I guess where do we stand today with oil at $100 here in terms of where you are on an operating basis even at current production with -- I know 75% is hedged, but the 25% tail, and then whatever we get from the new recompletions and wells, where does that put you in terms of EBITDA, plus or minus?

Well, going through the beginning -- through the rest of the year, I would say EBITDA with our current production, our current -- our current operations, which includes the horizontal and all that, I think we're -- and this is a forecast that has pure expectations, we could see in the $4 million to $5 million range for the year. Again, it's just a projection. It's not anything. And then as that program of those 92 wells crank it, as Dante had noted, we can see it doubling and doubling as we go forward.

Well, I think the 4 number was before oil prices shot up. And with the shot up, we think that number would be probably $6 million. But then if you add in the 500 barrels a day that will result from the 3 Virtus wells drilled in June plus the 5 workovers in May, you almost double that number to where you're pushing 10. And if the drilling...

That's next year. Those are already baked into the '26 numbers, that 500 and that 1,000.

[Operator Instructions] That concludes our verbal Q&A. [Operator Instructions] I will now turn the call over to Michael Porter for remaining questions.

Thank you, Matthew. Dante, there was 2 questions that came over the Internet, again, about what are the chances of dilution of stock in the near future. I don't know whether you want to comment on that or not since you already addressed it.

Yes. If we make an acquisition, and we need to use the ELOC to supplement any shortfall from an RBL, we'll use it. We'll use it. So right now, we have outstanding 50 million shares roughly, something like that. And we may use another 10 million shares if we have to, to supplement an acquisition. That's what some of our math says. So we're -- again, we're not buying anything unless it's unbelievably accretive. So we don't think we do any harm to the share price so long as we use the money for something tremendously accretive. And that's the only reason we use it.

The next question is, can you clarify the exact time line for upcoming well results, what a successful production outcome would look like from these wells and whether any additional capital raises are expected to support this operation?

Yes, I can fire in on that. So the workovers on the 5 vertical wells are all prefunded as part of the farmout agreement. So there was a $2 million set aside that the Virtus guys are managing to do those workovers. And I would say success is any of the wells over 50 barrels a day. So let's say they get the work done in May, here we're at the end of April today. If they do the work in May, we should report it in early June. So we're hoping that those wells are all north of 50 barrels a day. So you should see it in June. Then if we go to the 3 new drill wells, new horizontal wells, those are also prefunded. We don't need to raise any money for that. Again, it's prefunded in the farmout agreement. And those wells have a wide range on it, from 300 to 900 barrels a day. Now we're choosing sites -- the Virtus guys are choosing sites that are better than the norm. So I think the norm, if you say that the average is going to be 400 barrels a day or maybe even 450 barrels a day, these wells, I believe, are probably going to come in at 500 barrels a day. So again, people will argue with that, but I'm expecting wells certainly north of 300 barrels a day. North of 400 barrels a day would be a success and over 500 barrels a day would be a tremendous success. And if you do better than that, of course, we're quite happy. So that's debatable. But when you see it, you're going to know it. And I think, by mid-July, certainly by the end of July, you would know.

The next question is, when will you get confirmation of regaining compliance with the New York Stock Exchange?

That's a Mitch question.

Well, we have filed the 10-K for 2024, as we've stated, and we will file shortly the 2025. And then after that, they will give confirmation. In fact, we talked with our legal guys this morning. So we file that, and we file the others, they'll clear us and then they should immediately then clear us to go forward with the S-1. And S-1, of course, needs to drop with the latest K. So we expect that shortly after the '25 K is in.

Dante, the question is, what are you doing different than other oil companies domestically?

I don't think any company our size has a drilling inventory of 92 wells at $3.5 million each and at a plan of 400 to 500 barrels a day each. I'll challenge companies 10x our size that don't have that. The other thing is I think we've got a lot of reserves in place in excess of $1 billion to play with, with stacked reservoirs to play with. And we're focused on water flooding in one zone, horizontal drilling in another zone with yet other zones to go to. And I believe we're establishing a platform -- a business platform unique in the marketplace where we're going to extract the last barrel. We are not flippers. We're going to buy a property that's got these opportunities with stacked pay. We are focused on the Permian. And the Permian will handle all the oil we can sell. And it's getting more predictable for us as we gain more experience in the two main zones, the SVR and San Andres and now the [ Blinebry ]. So I think focusing on buying properties in the $30 million to $40 million range is unique. I think the bigger boys are looking at the $0.5 billion, $1 billion things, and we'll be content with doubling our EBITDA each year from right here. So we're starting at a lower number, so it's easy to go boom, boom, boom. Now maybe when we get to $50 million EBITDA or $100 million EBITDA, then we lose our edge. But right now, we feel like we have an edge to get to $100 million EBITDA.

What is EON's cash position at the present time?

It's very similar to the third quarter again. We try to maintain about $500,000 of cash, plus or minus. We actually have an excellent setup with Chevron, our oil buyer, where on the 20th of the month, they pay us exactly. They've never missed. They never missed at all us and our predecessor going back into almost 8 or 9 years. So that's how we do it. So we manage our cash that way. And so, any given day, it goes up and down, but we try to maintain at that level, very similar to what we did before.

Next question is the 500 to 1,000 barrels of oil that are coming up in the Virtus deal, how much of that is ours?

Well, that -- I've only quoted the net to us. And the math is the following. If you drill 3 wells at 500 barrels a day each, that's 1,500 and 1/3 of that would be ours. And then if you do the vertical wells and you say, well, we'll make 50 to 75 each there, I take 1/3 of that. So I round all that to say 500 barrels a day each net to us. So that's the midyear net barrels per day contribution to us. So now let's go to fourth quarter and let's say they drilled 10 wells, let's say the 10 wells roughly make 400, 500 barrels a day each, you're talking about 5,000 barrels a day. And if we took 1/3 of that and our net NRI actually after royalty is 27%, and I rounded that down to 1,000 barrels a day. So I said if they drill 10 wells, we'll get a net of 1,000 barrels a day each, really close to 1,100 barrels a day net-net. So for the purposes of this call, I'm not giving the gross numbers that would be before our take.

The next question is, does EON plan any more hedging contracts for this year?

No.

No, we don't. Unless for some reason oil drops to $60, which isn't going to happen. No, we absolutely don't. We've hedged. We've locked in our lease operating expenses for 2 years, plus a little even another extra $1 million. So we're in a great position there. And everything else, we're going to take advantage of the higher prices. We did what we needed to do, and we did that. It was a prudent and simple thing to do.

Again, when you're building a war chest to set up for a bank loan, you have to hedge. It's required. And so, we anticipated this requirement, and we looked for the best opportunities we could to hedge, but the hedging is done. We'll go naked from here on and off we go.

Okay. The next question is, what is your current EBITDA?

We answered that.

I think we answered that earlier.

Of course, we debated it. So a lot of you picked up just a little bit of a debate.

[indiscernible] $6 million.

Allow us to publish that, would you? Allow us to publish that. And frankly, a lot of the oil price increase has not been baked into our numbers yet. And when we file the 10-K, we don't really make a forecast. It's all rearview mirror numbers. So I think we owe you a '26-'27 forecast, and we've been hesitant to forecast EBITDA. But I think we need to do it, Mitch, and we'll just take it offline and we...

Yes. We'll do a bigger drill down.

Okay. What is the expected average production per horizontal well and payout period at current oil prices?

Yes. We also don't have that. Our numbers are based on $60 oil. So it's going to be faster. But when we were doing it at $60 oil, when we had this thing, the rough numbers I had was at $3.5 million at 500 barrels a day, we could pay out that drilling cost in less than a year. And again, we'll -- let's add that to the homework assignment we owe you post call. And we'll do a sensitivity curve for you.

Are there any nonoperated or joint venture opportunities beyond the Virtus farmout that could further derisk or accelerate the 10 to 20 well per year pace post '26?

I think that what we're doing at South Justis with Virtus and the drilling program there is cast in stone. I don't think there's anything there to do. And I think because we sold an ORRI there, there's no room to do a nonop deal with somebody. So that one is done. If you turn your attention over to South Justis, we're almost at the same place we were with South Justis about a year ago, meaning internal geology is wrapping up, and we think there's something there, and we've proven that our geologists know what they're doing. So I think there's a real opportunity to do a farmout at South Justis. And I think the drilling locations there are not anywhere close to 92, but it'd be a number closer to 25 to maybe 30 horizontal wells, which is still substantial. And we would approach the bigger guys that are experiencing the [ Blinebry ]. So that's on tap. That's in the lineup.

Okay. I have another question that I think was answered, but I'm going to read it anyway. How do you plan to fund the remaining horizontal program? Should investors expect equity dilution or additional farmout structures?

No, it's going to be by debt. We have several lenders that are specialists in minority owner drillouts. So I won't advertise their names, but you get favored rates. So it will be our preference to fund the debt with debt, the 35% working interest that we have. But we've also advertised, we have a clause in the farmout agreement that if we have trouble doing that, that the field could self-fund it by producing the oil and letting the oil pay our share to the tune of 150% payout to the Virtus guys. Now we don't like to do that because it's a high cost of money. But I would prefer to do that rather than press on selling shares.

Okay. And the last question, with new production being unhedged, how sensitive is EBITDA to a $10 move in oil prices once the horizontal drilling is online?

Today, we sell 250,000 barrels a year, and we sold that same volume in '25 and '24. So if you say you sell 250,000 barrels and you add $10, you're picking up $2.5 million for every $10. But I've run a few numbers. I think with drilling at the end of the year, we might be producing 0.5 million barrels. It could be that strong. So $10 would be $5 million net contribution. Mitch, I don't know if you want to say something different than that. It's just simple math.

Yes. It's simple math. We took -- we scaled back a little bit on the number of wells. And obviously, now with oil prices, it's going to push harder. But certainly an extra couple of hundred thousand over the $250,000. And so you take 200,000 extra barrels, you put your $10 in plus or minus because our forecast are around $70 and you can do the math. So basically, oil production this year will double. Now you get on into '27 after those 10 wells kick into place. And as Dante has been saying, it will double again. Well, yes, it's almost triple the production, maybe 2.5x to 3x, and it keeps going up from that because you've got different decline curve.

Dante, that was the last question. I'm turning he the call over to you.

Yes. Well, listen, those were good questions. I thank everybody for that. I do think -- and we've had reported through my concern about the lateness of the 10-K. I'd like to just assure everybody, we have an excellent relationship with the NYSE and the SEC, and we have ongoing conversations with them. We don't see an issue with this thing getting out within a week. We hate to say it's going to be tomorrow or it's going to be Friday or it's going to be Monday. And the way these things work, we provide a bunch of data to the auditor. The auditor looks at it and then they say, well, we got another question, and we go, "Oh my goodness, really? You got another question?" So we got to get them happy, and that's where we're at, trying to get them happy. And as soon as they're happy, they sign off and it issues and away you go. So I think that's about it. I appreciate all the calls. We're open and transparent. So if somebody didn't voice a question that you want, you can call us, you can e-mail us, any of us will be happy to chat with you. We're very excited about '26. Like a lot of you had already talked about, the news is going to come rolling through almost every month. You're going to hear about workovers and drilling and production, and we are very excited about it. There is risk, what will Mother Nature do, what will the wells do, but we're very optimistic. We think the science has been done, and the homework has been done by ourselves and the Virtus team. We think the experimentation and the completion methods is going to happen here very shortly, and they'll lock in on just how many pounds of sand and what grade of sand and whether you use resin or not, will all get figured out and away you go. And by the way, the Virtus guys have done this before, and they were very successful. So we like the model that the Grayburg-Jackson field presented to us as a business. We like the outlook for South Justis, and we like the opportunities that we're seeing in the marketplace to buy more properties. So with that, I'll turn it over to Matthew to wrap it up.

Absolutely. This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.