EONR — Q1 2026 Financial Report Analysis

EON Resources, a small oil producer with two waterflooded fields in New Mexico's part of the Permian Basin, sold almost exactly the same amount of oil and gas in Q1 2026 as a year earlier ($4.46M vs $4.47M), but its net loss nearly tripled to $5.77M from $2.03M. The main driver was a $3.58M loss on oil-price hedges, most of it unrealized, together with depletion charges that rose from $0.10M to $1.79M. The quarter closed with $0.13M of cash against a $22.6M working-capital deficit, and the filing again says there is substantial doubt the company can continue as a going concern. The 10-Q itself arrived on October 13, 2026, more than five months after the normal deadline.

Results

Q1 2025 figures are as restated in the FY2025 10-K. n/m = not meaningful.

The GAAP "total revenues" line is misleading on its own because EON puts its hedge result inside revenue. A hedge here is a swap that fixes the price on part of future production. It loses money on paper when oil prices rise, and that loss is booked each quarter even though the barrels haven't been sold yet. In Q1 only $0.31M of the $3.58M derivative loss was cash paid out on settled contracts. The other $3.27M was a mark-to-market loss on swaps running out to 24 months, which MD&A attributes to higher commodity prices. At March 31 the hedge book was a $3.21M net liability, compared with a $63,334 asset at December 31.

Where the money went

• Depletion jumped from $1.44 to $26.22 per BOE. Depletion spreads a field's capitalized cost over its expected barrels. MD&A gives three reasons for the jump: a larger cost base after developing the Seven Rivers waterflood interval, fewer reserves after an extra 5% overriding royalty was conveyed to Virtus, and reserves reclassified in 2025 from proved to probable. The charge is non-cash, but it signals that fewer booked barrels now sit behind the same investment.
• Lease operating expense rose 15% to $2.53M, which MD&A attributes to the added cost of the South Justis Field acquired in late June 2025. That acquisition lifted net producing wells from 342 to 472, yet production rose only 1.3% (749 to 759 BOE/d). Unless the new wells are very low-rate, that implies output from the original Grayburg-Jackson field fell over the year.
• G&A rose 33% to $2.41M because of higher professional fees, while stock-based compensation fell to $0.27M from $0.37M. A company that had to restate its past results and was late with its annual report is paying for that in audit and advisory bills.
• Interest expense fell to $0.26M from $1.74M after the senior term loan and most of the old private notes were paid off or exchanged in 2025. That is the one large line that improved.

What the headline numbers hide

• Survival is the issue, not earnings. Cash fell to $129,772 from $375,036. Current liabilities of $26.3M include $9.1M of accounts payable and $5.98M of revenue and royalties owed to other interest owners. The working-capital deficit is $22.6M (current liabilities minus current assets). The going-concern note says the doubt "has not been alleviated." The $150M equity line has raised $11.1M to date by selling 17M shares, but the company can't use it until a new S-1 registration is effective.
• Salaries became debt. In the quarter, officers, directors and employees converted $3.45M of salary and bonuses into promissory notes at 15% interest that mature in July 2029. This explains most of the drop in accrued liabilities ($9.82M to $6.35M) and the jump in related-party notes ($0.2M to $3.75M). It saves cash now and adds about $0.5M a year of interest later.
• Dilution is doing the work in EPS. The loss per share "improved" to -$0.11 from -$0.13 only because the average share count more than tripled (15.3M to 54.0M). The net loss itself was 2.8 times larger. Shares outstanding reached 55.4M at March 31. Convertible notes ($3.05M principal, plus a $1.2M White Lion note issued April 1 with a $0.15 conversion floor) can add more.
• The tax benefit softens the loss. The pre-tax loss was $7.32M. A $1.54M income-tax benefit, booked mostly by reducing the deferred tax liability, cut the net loss to $5.77M. No cash comes in from that.
• Cash flow was less bad than earnings. Operating cash flow was -$0.31M, compared with -$1.83M a year earlier, because most of the loss was non-cash (hedge mark-to-market and depletion) and payables kept growing. Our rough calculation, using the filing's line items: oil, gas and water-service revenue minus settled hedges, production taxes, LOE and G&A gives about -$1.1M before depletion and unrealized hedges, versus about +$0.05M in Q1 2025.
• Receivables grew faster than sales. Oil and gas receivables rose to $2.33M from $1.41M at December 31 on flat quarterly sales.
• The accounting is still being corrected. Management again concluded that disclosure controls were not effective, citing too few accounting staff, weak reconciliations and errors on complex instruments. On the same day as this 10-Q, EON filed a 10-K/A restating FY2025 because depletion from the reserve reclassification had been applied retroactively instead of going forward, which overstated 2025 depletion expense. The NYSE American sent a late-filing notice in April. The 10-K was filed on September 28, inside the cure period.

Takeaway: EON's wells produce a steady ~760 BOE a day at roughly $65 a barrel, but field costs plus overhead now run above $72 per BOE. The business is being funded by convertible notes, merchant cash advances and staff deferring pay, while the equity line it depends on is frozen until a new registration is effective. Q1's hedge and depletion charges are non-cash. The cash gap is not.

Outlook

The filing gives no production or spending guidance. Management's stated plan is to cut costs, keep hedging proved production, and sell more Class A shares once the S-1 is effective. Three things to watch: whether the Q2 2026 10-Q, which was already overdue at the time of writing, gets filed without another listing notice; whether the S-1 becomes effective and reopens the equity line; and whether LOE per BOE falls back toward the low $30s as the South Justis wells settle in. Without the equity line, we see no way in this filing to cover a $22.6M working-capital hole from operations that are cash-negative before capital spending. Development spending was another $1.09M in the quarter. Expect more dilution if the company is to keep going.