Overview of the Company’s Financial Performance

We are an independent energy company focused on the development, exploration, and production of natural gas and crude oil properties, primarily in the U.S. Permian Basin and Colombia. The company’s mission is to deliver growth in net asset value per share to investors through strategic oil and gas investments.

In 2024, the company experienced a 30% decrease in total oil and gas revenues to $560,180, down from $794,027 in 2023. This was due to declines in both oil and gas production, as well as lower average sales prices for natural gas. Lease operating expenses increased by 24% to $747,559, largely due to higher production costs and the development of six new wells in the U.S.

The company incurred significant impairment charges in 2024, totaling $6,668,634. This included a $6,392,874 impairment of the company’s investment in Hupecol Meta in Colombia, as well as a $275,760 impairment of its U.S. assets. The Hupecol Meta impairment was due to indications that the investment’s earnings performance had deteriorated and was no longer viewed as viable. General and administrative expenses, excluding stock-based compensation, increased by 32% to $2,123,051, primarily due to a $800,000 payment to the former CEO to terminate his change of control agreement.

Despite the challenges, the company generated $1,024,461 in other income in 2024, primarily from distributions received from its equity investment in Hupecol Meta. However, this was down from $1,369,518 in 2023.

Revenue and Profit Trends

The company’s total oil and gas revenues decreased by 30% in 2024, from $794,027 to $560,180. This was driven by an 18% decline in oil production and an 11% decline in gas production, as well as a 99% drop in the average sales price of natural gas.

Table 1: Production and Pricing Data (Excluding Hupecol Meta)

The decrease in production volumes was due to natural production declines, while the changes in average prices reflected broader movements in global energy markets.

Despite the revenue decline, the company was able to generate $1,024,461 in other income, primarily from distributions received from its equity investment in Hupecol Meta. However, this was down from $1,369,518 in the previous year.

The company’s profitability was significantly impacted by the large impairment charges taken in 2024, totaling $6,668,634. This included the $6,392,874 impairment of the Hupecol Meta investment and a $275,760 impairment of the company’s U.S. assets.

Strengths and Weaknesses

Strengths:

• Diversified asset base, with operations in the U.S. Permian Basin and Colombia
• Ability to generate other income through equity investments and distributions
• Strong liquidity position, with $2.96 million in cash and $3.07 million in working capital at the end of 2024

Weaknesses:

• Declining production and revenues, particularly in the U.S. operations
• Significant impairment charges, indicating potential issues with asset valuations
• Reliance on equity investments, such as Hupecol Meta, which can be volatile and subject to impairment
• High general and administrative expenses, including the $800,000 payment to the former CEO

Outlook for the Future

The company’s future outlook is somewhat uncertain, given the challenges it faced in 2024 and the ongoing evaluation of its investment in Hupecol Meta.

On a positive note, the company has entered into non-binding letters of intent to acquire Abundia Global Impact Group, LLC (AGIG) and RPD Technologies, LLC. These acquisitions, if completed, would shift the company’s focus towards developing a production plant for plastics and petrochemicals in the Houston area, diversifying its portfolio into the energy transition sector.

However, the company’s existing oil and gas operations continue to face headwinds, with declining production and revenues. The impairment of the Hupecol Meta investment also raises concerns about the viability of the company’s Colombian assets.

The company’s ability to fund its operations and future growth will depend on its success in completing the AGIG and RPD acquisitions, as well as its ability to raise additional capital through equity offerings or other means. The company’s liquidity position, with $2.96 million in cash at the end of 2024, provides some cushion, but the company may need to secure additional financing to support its strategic initiatives and ongoing operations.

Overall, the company’s future outlook is mixed, with the potential for growth in the energy transition sector balanced by the challenges facing its core oil and gas business. Investors will need to closely monitor the company’s progress in executing its strategic plan and managing its existing assets.