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 EON 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. 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 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. Thank you all for joining us. The outline of today's call is really going to be the agenda. I'll cover that. The agenda will include, we're going to start with the status of the 10-K, which you don't have, I'll divert to our CFO. My goodness, how can I not remember Mitchell? Mitchell, 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. I'm going to start this off by first calling on our CFO, Mitch Trotter, to explain what status is of our 10-K, please.
Sure. Thanks, Dante. I wasn't gonna start with a joke, but I'll start with, I'm Mitch Trotter, the CFO. Just so Dante knows. Anyway, I wanna 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 the Grayburg-Jackson Field and the September ninth recapitalization farm out 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. First, the 2024 10-K has been refiled. It was done last Friday. It's all done.
The 2025 K is nearly ready to file and, you know, we're finalizing the review of the GAAP treatments and the very complicated tax treatments as well. Do note, operational results, cash, they weren't impacted by all this. Later, when it gets to the financials, I'll talk about the underlying numbers, which tell a good story for EON. Right now, I want to turn it back over to Dante, and I'll address those items later. Back to you, Dante.
Okay. I'm gonna cover the summary points I think that everybody should be taken 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. We realized a gain of $14 million. Those things alone made it an outstanding year. Couple that with, we signed a farm-out agreement with the Virtus guys based in Dallas. Thanks to all of them, led by Lance Taylor, that added 92 horizontal wells to our drilling inventory that we have high expectations for. Among those wells, three are permitted with the BLM to start drilling in June. 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 2026, 2027, 2028 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, not severely. A lot of that was mitigated by our hedging position, which allowed us to hold about $70 a barrel. In 2026, it goes without saying prices are way up. We did hedge a lot of 2026 and into 2027. 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's gonna stay up for the balance of this year, and we think it'll be elevated into 2027. Nobody knows what it's gonna be, but the numbers are gonna be up. They're gonna be substantially up from 2025. With that, I'm gonna flip to page three, the company overview and the takeaways from that slide. Really, the takeaway here is that we own two 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 gonna be taken out of those reserves in the San Andres by the Virtus drilling. Those 92 wells are really gonna make more of an impact to our company than anything else we're doing.
The South Justice Field that we bought looks like it's got potential to do the same thing again, to do a farm-out down in the Drinkard formation, and we're just now getting those numbers from our geologists and technical team, and Jesse will talk a little bit about that. Flipping on to the next slide, page four, celebrating our 2025 successes. As mentioned, we raised $45 million from selling a pair of ORRI 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 2025.
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, 2026, where oil shot up. The farm-out 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 a $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 2025, 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.
I believe that what we did in 2025 sets the stage for the rest of the decade to have a doubling and then a doubling again of our EBITDA. This year you'll hear those numbers coming out from Mitch in just a minute. Page five. Poised for growth in 2026 and beyond. These elevated oil prices, they already had an impact this month. We saw $300,000 net increase to our income, and that's after hedging. We, you know, in hindsight, we would have said, "Gee, we would have done better if we didn't hedge." Still, the hedging didn't affect that we still made $300,000 more dollars.
Horizontal drilling by the farm-out 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 one approval back on five 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. The first three 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.
If you add that up and say, well, let's multiply that times whatever, $75, $80 a barrel, that's gonna be an addition of $8 million to our bottom line. In fourth quarter, in talking to the, again, the Virtus guys, we had planned on seven to 10 horizontal wells. If oil prices kinda hang in where they're at, that number would probably be 10 instead of seven. Instead of drilling them in December, that might be in October. All planning is going toward accelerating these numbers. Other production potential, we have water injectors. We had a water injection line down. We talked about that over the last year, a four-inch line that'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 Justice field to put some inactive wells on active production. We think we'll pick up 250 barrels a day there. With that, I'm gonna 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, you'll hear throughout, September ninth was a huge event for us. It'll drive a lot of the numbers of this year and actually years to come with the horizontal program. I'm gonna drill down into the underlying numbers, but you'll see that 2024 and 2025 were actually very similar. Let's go ahead to the next slide on revenues, please. On the revenue side, the overall production has been stable at 250,000 barrels per year for the last two years. Now, the dollars revenues did drop from 2025 to 2024, 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. As Dante already noted, that uptick in March has already added $300,000 net revenues to us. We'll see hopefully the 96 and now 100 today oil price going forward. Our hedging program, it did soften the impact to us in 25, and that's its purpose. Okay. Accordingly, we have hedged 75% through the end of next year, through end of December of 2027 for the same reason. This is just to cover, and it covers I mean, our hedge, our lease operating expenses all the way through the end of 2027. 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 feel the forecast of elevated oil prices for a while, we do expect to reap those benefits. 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 half a million over the last year-over-year on the Grayburg-Jackson Field, that came from improved operational efficiencies by our field team and operations team. It was a good success by them. As Dante had noted, the oil price drop, I think he did, of $13, it impacted our reserves at the end of 2025. Under GAAP, that impact, you'll see when we release the financials, took a $5 million hit to depletion and depreciation.
That's a GAAP thing. With the oil prices higher today, we do expect those reserve reports to recover in 2026 to some level, depending on the prices throughout the year. Let's move on to the next slide. On G&A, just like the lease operating expenses, we focused on reducing costs like we've said we would. You can see in the table there's a recurring G&A, the ones that we can manage, as we go forward, we can manage the others. We reduced by net $1 million from 2024 to 2025. 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 ninth funding, which turned out to be good.
Insurance costs, down $400,000. That really doesn't bake in much of what we've renegotiated in Q4 of 2025 that we'll reap the benefits in 2026. I've noted every quarter since we've started that the one-time adjustments and non-recurring items that may be up in G&A from the funding and whatnot. I'm not gonna drill down at this point. You'll see that later when we release. Most of it related to the September ninth funding, like everything else. Let's go ahead to the next slide. This is the below the line stuff, as I call it. It's other income expense. It's where everything else falls. Let me hit the main points.
Interest expense dropped $2.7 million from 2024 to 2025. That all came from the September ninth funding when we retired all that senior debt. Big impact in just in four months. That's good for us obviously. As Dante noted, we had $13.5 million of gains relating to that September ninth funding. Then we've talked about the complex instruments and all the GAAP stuff. I've lumped all that 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. Let's go on to the next slide, the balance sheet. I'm not gonna spend a lot of time on the balance sheet at this point. Assets are very similar to what we reported in Q3. 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 bank debt. We retired the $20 million of the senior note, which included the accrued interest. We cleaned up $9.8 million of private loans and warrants that relate to 2023 pre-acquisition. We did it via convertible notes, and now at the end of 2025, we're down to only $2.3 million of that, of that trailing cost. On the equity side, preferred shares, Class D shares, non-controlling interests, they're all gone. With that, I'm gonna stop here. Obviously take questions in the Q&A if there are any, but I wanna move on to Jesse in operations next, please.
Good afternoon. Yes, this is Jesse Allen, VP of Operations for EON Resources and our subsidiary, LH Operating. Today I'll be talking about the operations at the Grayburg-Jackson Field and South Justice fields. With that, I 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 safe, safely. Production has averaged at the Grayburg-Jackson and the South Justice field a little over 1,000 barrels of oil a day gross. Production is hanging in there.
As Dante has mentioned, we did complete a two-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 Justice Field back to production, and hopefully we'll get that accomplished here in the not too distant future. In addition there at the South Justice 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 Justice Field.
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. Let me go a little bit into the San Andres horizontal drilling program. It's part of the farm out we did with Virtus there in the September 9, 2025 agreement. Currently, we acquired five vertical wells that we're, we just started the recompletion of the first one and it'll be in the intervals that we plan to go horizontal.
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' own analysis. Expect to spud the first three horizontal wells, and when I say spud, I mean start drilling. Should happen maybe early to mid-June. We're really looking forward to the start of that program. Then, as I always like to say, success breeds success. We're planning, if that is the case, by the end of 2026 to drill 10 additional horizontal wells. With that, I'll turn it back over to Dante, and we'll field your questions there at the end. Dante?
Yeah. Thanks, Jesse. You know, why is EON a good long-term investment? First of all, we're all shareholders. Myself, the other members of the management team, the board of directors, we're all concerned about the share price. We don't like to lean on the shares to raise money. We do it when we have to, 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. Again, we're trying not to put pressure on the stock price by selling too many shares. However, we do wanna acquire properties. We are an acquisition company.
So far, we think the debt markets are going to cover most of what we need. We don't expect to lean too hard on the sale of the stock to dilute the stock. It's our intention. You know, we were at one point when we started this thing back in 2023, we were a $10 stock. We're hell-bent to get back there. In 2025, 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. When we get those results, you're gonna see that. Certainly, these three wells that we're gonna drill in June, you're gonna see that. It takes us a month before we know because the wells have to produce back all that sand and frack water and then see what it does once it's all cleaned up. The South Justice Field, we think that's gonna be another smaller but similar approach to what we did with Grayburg Jackson. You know, the company likes the stock value. We all are buyers of the stock.
As an acquisition company, we are looking to raise money so we can buy another Permian property. I would tell shareholders, expect something this year on that one. That's the summary for this. Again, we all apologize the 10-K's 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 deal we did, it was really a five-way deal in September, and we sold something we had no cost basis for, so we had to have all these accounting scientists to cook up with the Monte Carlo simulation, what is the appropriate price of an ORI? All that's just about done. We're hoping that imminently we'll issue that 10-K.
With that, I'm wrapping it up, and I'm gonna turn it back over to Mike for Q&A, please.
Certainly. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Thank you. Once again, everyone, if you have any questions or comments, please press Star then One on your phone. Please hold while we poll for questions. Your first question is coming from Greg Weaver. Your line is live.
Hey, good afternoon, guys. Appreciate you doing the call today. 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 Justice. That's 100% discretionary expenditure on your part.
This is Dante. We have no debt on that property. The structure that we're looking for is two and a half million dollar increments to reactivate 25-50 wells per tranche. 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. We'll have to buy pumping units to activate the other 120.
What we did was we figured if we could raise two and a half million dollars, 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 one year, 200% return on their investment by giving them 50% of our net income until they get their money back. That override goes away. We call that a term override. A lot of folks in the market like a permanent override, what we're trying to do without using stock, without using a loan, is to sell a temporary ORI that generates a guaranteed 200% return on your money.
Okay, great. That's helpful. I guess just on the OpEx front, sounds like Mitch didn't wanna get into it too much, but I assume there's been kinda some one-time stragglers in here. Can you give us a sense of kinda what you foresee as the kinda base run rate, 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 wanna mix it in with the other. Yeah.
I'm sorry, you said G&A?
Yeah.
Yeah. We run about $600,000 a month in G&A, which primarily is salaries and professional fees and insurance. A chunk of that is also, you know, like, stock options, RSUs, that's part of it. You can use $600K, $500K-$600K of G&A. The pieces that I didn't drill down into were, like, certain legal reserves that are in a one-time adjustment that came to us with the September ninth 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. 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.
I'm not afraid of doing it just wasn't appropriate to spend all that time at this moment.
Right. Fair.
Hopefully, that answered your question.
Yeah. That's fine. Appreciate that. Just lastly, I guess kinda 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%'s 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, you know, plus or minus?
Well, going through the beginning for the rest of the year, I would say EBITDA with our current production, our current operations, which includes the horizontal and all that. This is a forecast that has, you know, pure expectations. We could see in the $4 million-$5 million range for the year. Again, it's just a projection. It's not anything. 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. With the shot up, we think that number would be 6 million. If you add in the 500 barrels a day that will result from the 3 Virtus wells drilled in June, plus the five workovers in May, you almost double that number to where you're pushing 10. If the drilling at the end-
That's next year. Those are already baked into the 26 numbers. That 500 and that 1,000.
Okay, Mitch.
Great. Thank you.
Thank you. Once again, everyone, if you have any questions or comments, please press Star then One on your phone. Please hold while we poll for questions. Thank you. That concludes our verbal Q&A. For those listening on the webcast, you can submit a question at this time by clicking on the Ask Question button on the left of your screen. Type your question into the box and hit the send button to submit your question. I will now turn the call over to Michael Porter for remaining questions.
Thank you, Matthew. Dante, there was two 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 wanna comment on that or not since you already addressed it.
I mean, 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. I mean, right now we have outstanding 50 million shares roughly, something like that. We may use another 10 million shares if we have to supplement an acquisition. That's what some of our math says. Again, we're not buying anything unless it's unbelievably accretive. We don't think we do any harm to the share price, so long as we use the money for something tremendously accretive. That's the only reason we use it.
Thank you. The next question is, can you clarify the exact timeline 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?
Yeah, I can fire in on that. The workovers on the 5 vertical wells are all pre-funded as part of the farm-out agreement. There was a $2 million set aside that the Virtus guys are managing to do those workovers. I would say success is any of the wells over 50 barrels a day. Let's say they get the work done in May, you know, here we're at the end of April today. If they do the work in May, we should report it in early June. We're hoping that those wells are all north of 50. You should see it in June. If we go to the three new drill wells, new horizontal wells, those are also pre-funded. We don't need to raise any money for that.
Again, it's pre-funded in the farm-out agreement. Those wells have a wide range on it, from 300 to 900 barrels a day. The Virtus guys are choosing sites that are better than the norm. I think the norm, if you say that the average is gonna be 400 or maybe even 450, these wells I believe are probably gonna come in at 500. Again, the people will argue with that, but I'm kind of expecting wells certainly north of 300. North of 400 would be a success, and over 500 would be a tremendous success. If you do better than that, of course, we're quite happy.
That's debatable, but when you see it, you're gonna know it in, I think by mid-July, certainly by the end of July, you would know.
Thank you. 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. Then after that, they will give confirmation. They. In fact, we talked with our legal guys this morning. 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. The S-1, of course, needs to drop the latest K in. We expect that shortly after the 2025 K is in. Okay?
Thank you. Dante, the question is, what are you doing different than other oil companies domestically?
You know, I don't think any company our size has a drilling inventory of 92 wells at $3.5 million each and a plan of 400-500 barrels a day each. You know, I'll challenge companies 10 times our size that don't have that. The other thing is, I think we've got a lot of reserves in place, you know, in excess of $1 billion to play with stacked reservoirs to play with. We're focused on water flooding in one zone, horizontal drilling in another zone, with yet other zones to go to. I believe we're establishing a platform, a business platform unique in the marketplace where we're gonna, we're gonna extract the last barrel. You know, we are not flippers.
We're gonna buy a property that's got these kind of opportunities with stacked pay. We are focused on the Permian and the Permian will handle all the oil we can sell. It's getting more predictable for us as we gain more experience in the two main zones, the SVR and the San Andres and, you know, now the Burnberry. Focusing on buying properties in the $30 million-$40 million range is unique. I think the bigger boys are looking at the half billion, $1 billion things, and we'll be content with, you know, doubling our EBITDA each year from right here. We're starting at a lower number, so it's easy to go boom, boom, you know?
Maybe when we get to $50 million EBITDA or $100 million EBITDA, then we lose our edge. Right now, we feel like we have an edge to get to $100 million EBITDA.
Thank you. What is EON's cash position at the present time?
Mitch?
Yep, it's very similar to the third quarter again. We try to maintain about $500,000 of cash, ±. 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 eight or nine years. That's kind of how we do it, so we manage our cash that way. Any given day, it goes up and down. We try to maintain at that level. Very similar to what we did before.
Thank you.
Thank you, sir. The 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, I've only quoted the net to us, the net to us. If the math is the following: If you drill three wells at 500 barrels a day each, that's 1,500, and a third of that would be ours. If you do the vertical wells and you say, "Well, we'll make 50-75 each there," I take a third of that, so I round all that to say 500 net to us. That's the midyear, that's the midyear net barrels per day contribution to us. Now let's go to fourth quarter, and let's say they drill 10 wells. Let's say the 10 wells roughly make 400 or 500 barrels a day each, you're talking about 5,000 barrels a day.
If we took a third of that, you know, and our net NRI actually, after royalty, is 27%, I sort of rounded that down to 1,000 barrels a day. I said if they drill 10 wells, we'll get a net of 1,000, really closer to 1,100 barrels a day, net, net. For the purposes of this call, I'm not giving the gross numbers that would be before our take.
Thank you, sir. The next question is, does EON plan any more hedging contracts for this year?
No.
No. No.
We don't. Unless, unless for some reason oil drops to $60, which isn't gonna happen. No, we absolutely don't. We've hedged, we've locked in our lease operating expenses through, for two years, plus a little even another extra $1 million. We're in great position there. Everything else, we're gonna take advantage of the higher prices. We did what we needed to.
Yeah.
We did. That's a proven and reasonable thing to do.
When you're building a war chest to set up for a bank loan, you have to hedge. It's required. We anticipated this requirement. We looked for the best opportunities we could to hedge. The hedging is done. We'll go naked from here on. Off we go.
Okay. The next question is, what is your current EBITDA?
We answered that.
I think we answered that earlier. Yep.
We debated it. A lot of you picked up that there's a little bit of a debate.
You $6 million.
Allow us to publish that, would you? Allow us to publish that. Frankly, a lot of the oil price increase has not been baked into our numbers yet. When we file the 10-K, we don't really make a forecast. It's all rearview mirror numbers. I think we owe you a 26, 27 forecast. We've been hesitant to forecast EBITDA, but I think we need to do it, Mitch. We'll just take it offline, and we can get that to you.
Yeah. We'll do a bigger drill down now.
Bigger drill down.
Okay. What is the expected average production per horizontal well and payout period at current oil prices?
Yeah, we also don't have that. Our numbers are based on $60 oil. 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 and a half million, at 500 barrels a day, we could pay out that drilling cost in less than a year. Again, we'll add that to the homework assignment we owe you post-call. We'll do a sensitivity curve. We'll do a sensitivity curve for you.
Thank you. Are there any non-operated or joint venture opportunities beyond the Virtus farm-out that could further de-risk or accelerate the 10 to 20 well per year pace post 2026?
I think that what we're doing at South Justice with Virtus and the drilling program there is cast in stone. I don't think there's anything there to do. I think, because we sold an ORRI there's no room to do a non-op deal with somebody. That one's done. If you turn your attention over to South Justice, we're almost at the same place we were with South Justice about a year ago, meaning internal geology is wrapping up. We think there's something there, and we've proven that our geologists kinda know what they're doing.
I think there's a real opportunity to do a farm out at South Justice. 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. We would approach the bigger guys that are experienced in the Drinkard. That's on tap. That's in the lineup.
Okay, I have another question that I think was answered, but I'm gonna read it anyway. How do you plan to fund the remaining horizontal program? Should investors expect equity dilution or additional farm-out structures?
No. It's going to be by debt. We have several lenders that are specialists in minority owner drill outs. I won't advertise their names, but we get favored rates, so it'll be our preference to fund the debt with debt, the 35% working interest that we have. We've also advertised, we have a clause in the farm-out agreement that if we have trouble doing that the field could self-fund it by producing the oil and letting the oil pay our share to the tune of a 150% payout to the Virtus guys. 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. 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?
You know, today, we sell 250,000 barrels a year. If and we sold that same volume in 2025 and 2024. If you say you sell 250,000 barrels and you had $10, you're picking up $2.5 million for every $10. I've run a few numbers. I think with drilling at the end of the year, we might be producing 0.5 million barrels. I mean, it could be that strong. $10 would be $5 million net contribution. Mitch, I don't know if you wanna say something different than that. It's just simple math.
No. Yeah, I mean, it's simple math. You know, you know, we scaled back a little bit on the number of wells and, you know, and obviously now with oil prices, it's gonna push harder. Certainly an extra 200,000 over the 250 and so you take 200,000 extra barrels, you put your $10 in, plus or minus, 'cause our forecasts are around $70, and you can do the math. Basically oil production this year will double. Now, you get on into 2027 after those 10 wells kick into place and, you know, as Dante's been saying, you know, it'll double again.
Well, yeah, it's almost triple the production, maybe two and a half to triple, and then it keeps going up from that, so, 'cause you got a different decline curve.
Dante, that was the last question. I am turning the call over to you.
Yeah. Well, listen, those are good call, good questions. I thank everybody for that. I do think, and we've had reported through Mike 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. You know, we hate to say it's gonna be, you know, tomorrow or it's gonna be Friday or it's gonna be Monday. The way these things work, you know, 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? We gotta get them happy, and that's where we're at, trying to get them happy. As soon as they're happy, they sign off, and it issues, and then away you go. I think that's about it. I appreciate all the calls. You know, we're open and transparent, so if somebody didn't voice a question that you want, you can call us, you can email us, you can, you know, any of us will be happy to chat with you. We're very excited about 2026. Like a lot of you had already talked about, the news is gonna come rolling through almost every month. You're gonna hear about workovers and drilling and production and we are very excited about it.
I mean, we, you know, there is risk, you know. What will mother nature do? What will the wells do? 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 gonna happen here very shortly, and they'll lock in on, you know, just how much, 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. By the way, the Virtus guys have done this before, and they were very successful. We like the model that the Grayburg Jackson field presented to us as a business.
We like the outlook for South Justice, and we like the opportunities that we're seeing in the marketplace to buy more properties. 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.