HOUSTON, TX / ACCESSWIRE / January 25, 2024 / HNR Acquisition Corp (NYSE American: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. Today, HNRA announces the expansion of its oil price hedging program.
The hedging strategy of the Company is to maintain a sufficient level of pricing hedges for sales of oil production to cover (i) debt service requirements, and (ii) a base level of operating expenses in the event oil prices were to decrease dramatically. The level of pricing hedges for future oil production is targeted to responsibly balance the coverage protection for downward market fluctuations with the potential benefit from upward market fluctuations on current and future-expansion of oil production.
HNRA's hedging program is based on a rolling two-year period where the Company reviews, on a rolling three-to-six-month basis, the level that is hedged as additional oil production comes online. If there are dramatic increases in oil prices, the Company will evaluate the benefits of adding more hedges to lock in higher sale prices.
"I like the flexibility of our hedging approach. Not only does the program provide some downward protection, it allows HNRA to take advantage of upward market conditions," said Dante Caravaggio, President and CEO of HNRA. "Oil prices are a reflection of world-wide production and consumption levels, and driven by the global political environment. Our hedging plan allows us to take advantage of the ever-changing landscape."
The Company uses two types of hedging instruments: (i) swaps where the price is fixed regardless of market price; and (ii) collars where the price is subject to a minimum floor/put price and a maximum ceiling/call price. The Company's current hedging portfolio consists of approximately 60% swaps and 40% collars.
Mitch Trotter, CFO of HNRA, on the status of the hedging program stated, "All of HNRA's current hedges are at least $70.00 per barrel, with the upper bounds of some of the collars as high as $91.90. The previous owner of LH Operating, LLC had 108,000 barrels of oil hedged for 2024. Since the acquisition, HNRA has added hedging contracts increasing the total hedged across 2024 and 2025 to 268,000 barrels of oil. The Company plans to continue to increase the hedging position as market prices dictate favorably priced hedging instruments."
"The hedges currently in place provide HNRA downward market fluctuation protection to cover its debt service obligations and fixed operating costs which is a good financial position to be in at this time," Mitch Trotter, CFO of HNRA continued. "Having a significant volume of oil sales hedged at $70.00 per barrel or higher against lift costs estimated in the range of $17.00 to $18.00 per barrel provides for solid operating cash flow."
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. On November 15, 2023, HNRA acquired its operating entity, LH Operating, LLC, whose assets include interests in the Grayburg-Jackson oil field in the prolific Permian Basin in Eddy County, New Mexico.
HNRA's Class A common stock trades on the NYSE American Stock Exchange (NYSE American:HNRA). 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.
mike@plrinvest.com
SOURCE: HNR Acquisition Corp
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