In a significant move within the energy sector, HNR Acquisition Corp, a special purpose acquisition company (SPAC), announced the successful completion of its business combination with Pogo Resources, LLC and its subsidiaries. Despite the positive news surrounding the merger, the stock of HNR Acquisition faced a sharp decline on Thursday morning.
As of Wednesday’s closing, HNR Acquisition’s stock stood at $6.77. However, the commencement of Thursday’s trading session saw the stock open at $7.65, only to experience an abrupt downturn, currently trading at $3.47.
At the time of this publication, HNR Acquisition Corp stock (HNRA) has witnessed a decline.
Current Price: $3.35
Change : -3.42
Change (%): (-50.52%)
Volume: 173.4K
Source: Tomorrow Events Market Data
HNR Acquisition sealed the business combination through the acquisition of all equity interests in Pogo Resources LLC and its subsidiaries. Pogo Resources boasts assets that include interests in the Grayburg-Jackson oil field, situated in the prolific Permian Basin in Eddy County, New Mexico.
The Grayburg-Jackson oil field, located on the Northwest Shelf of the Permian Basin, holds a prominent position, containing the largest recoverable reserves among all unconventional basins in the United States, according to the United States Geological Survey. Pogo’s extensive holdings cover 13,700 contiguous leasehold acres, 343 producing wells, and 207 injection wells, totaling 550 wells. Presently, daily production reaches approximately 1,400 barrels of oil and oil equivalent.
Management anticipates a significant boost in production, aiming to reach nearly 4,000 barrels of oil and oil equivalent per day within the next three years, as indicated by a reserve report from William M. Cobb & Associates, Inc., a third-party engineering firm engaged by Pogo.
William M. Cobb & Associates, Inc., an independent petroleum engineering firm founded in 1983, estimated proven reserves of $434 million on the property. Pogo achieved $35 million in revenues, showcasing robust cash flow and earnings in 2022.
Highlighting the experience and continuity in operations, HNRA will retain all 12 field employees and supervisors. The Vice President of Operations at HNRA brings over 40 years of experience in similar water flood oil fields, while each field supervisor boasts 10-15 years of extensive industry experience.
Joseph V. Salvucci, Chairman of the Board, expressed satisfaction with the merger, stating, “Pogo Resources, LLC fit all of our criteria for revenues, earnings. The management team has many years of experience in the oil and gas business. We believe that there is a significant upside to grow the company and expand the revenues and profits.”
CEO Dean Rojas emphasized the remarkable potential of the Grayburg-Jackson Field, anticipating a production increase to 4,000 barrels a day in 36 months. He highlighted the stacked-play potential of the Northwest Shelf of the Permian Basin and underscored the company’s focus on improving leasehold position, well-spacing, and completions to recover a greater portion of oil from reserves.
Mitchell B. Trotter, CFO, outlined the financial strategy, stating, “With free cash flow and growth, we expect to pay down debt and build a very strong balance sheet.” He also outlined plans for an aggressive expansion strategy in the Permian Basin, targeting working interests, contiguous acreage positions, and stable oil and gas production rates for substantial increases in revenues and profits.
