Horizontal well drilling program overview: On September 9, 2025, the Company's subsidiary, LH Operating, LLC ("LHO"), entered into a Joint Development Agreement (the "Farmout") to develop the San Andres interval in GJF through new horizontal wells to be drilled and completed. More information about the Farmout can be found in our press release announcing the Farmout. More information about the horizontal drilling program can be found in the horizontal program deck on our Grayburg-Jackson Field webpage. Current status and highlights of the development program include:

Recompletions of three vertical wells in the San Andres interval ("Recompleted Wells") were performed in May to July which were used to test and refine horizontal well drilling intervals. The results were far better than expected with initial production of 140 BOPD from the Recompleted Wells.

LHO is being carried (i.e., without cost to LHO) under the Farmout for the drilling of the first three horizontal wells ("Carried Wells"). No bank loan, no bank financing fees, no stock sales, no incremental G&A's have been incurred for Carried Wells. A modest operating cost is expected to pump the Carried Wells.

The spudding (the official start of the drilling process) of the first Carried Well started August 24, 2026. Drilling of each horizontal well will take approximately 10 days to reach the objective depth.

Once spudding occurs, a horizontal well requires approximately 60 days to complete including drilling, the fracing process, installation of surface facilities, and testing. Proceeds from oil sales from these horizontal wells are expected to start being received beginning in October.

The drilling of an additional 12 horizontal wells is expected to start in December of 2026. An additional 10 to 20 wells are expected to be drilled in 2027 and each year thereafter until the development program is completed. The Farmout provides that horizontal wells drilled after the Carried Wells provides for EON to pay its 35% Working Interest share estimated to be $1.2 million per well to participate as a consenting party. The Company plans to primarily debt finance these development costs of its subsidiary.

Under the Farmout, LHO retains a 35% non-operated working interest in horizontal wells in the development program as to the San Andres interval. LHO remains the Operator. LHO retained its 100% working interest in the remaining formations throughout the GJF which includes its waterflood operations principally in the Seven Rivers formation ("Waterflood Production").

Gross oil production is expected to reach and exceed 20,000 BOPD during the development program with 35%, or 7,000 BOPD, attributable to LHO's working interest. The net BOPD contribution to the Company by LHO from the Carried Wells is expected to be 500 BOPD which equates to $1 million in net free cash flow per month. Due to the two months required to drill, complete and bring these wells on line, oil production and revenues from sales will not materialize until October or November.