AGIG

SEC Filing Summary: Houston American Energy Corp. (HUSA)

Business Context and Reporting Period

This Form 10-K covers the fiscal year ended December 31, 2024. Houston American Energy Corp. is an independent oil and gas company focused on the Permian Basin (Texas), the Gulf Coast (Louisiana), and Colombia. The company operates as a non-operating joint interest owner, partnering with larger operators to minimize drilling risks. As of December 31, 2024, the company held 1,252 net acres and 8 gross producing wells (4 in the U.S., 4 in Colombia).

Key Financial Metrics

Production Volumes (2024): 5,992 barrels of oil, 53,476 Mcf of natural gas, and 159,680 gallons of NGLs (U.S. only; Colombia production excluded from consolidated revenue).

Reserves: Total proved reserves are 150,904 BOE. The Standardized Measure of Discounted Future Net Cash Flows (PV-10) is $1,123,270.

Material Changes vs. Prior Period

• Revenue Decline: Total oil and gas revenue decreased 30% to $560,180. This was driven by an 18% drop in oil production, an 11% drop in gas production, and a 99% collapse in the average natural gas sales price (from $1.38/Mcf in 2023 to $0.17/Mcf in 2024).
• Impairment Charges: The company recorded a total impairment expense of $6,668,634. This includes a full impairment of $6,392,874 on its equity investment in Hupecol Meta (Colombia) due to deteriorated earnings and a $275,760 impairment on U.S. assets due to price declines.
• Operating Expenses: Lease operating expenses increased 24% to $747,559 due to inflation and workover costs. General and administrative expenses rose 32% to $2,123,051, primarily due to an $800,000 payment to terminate the former CEO's change of control agreement.
• Financing: The company raised $2,325,000 in 2024 via a private placement of 2,180,180 shares. In January 2025 (subsequent event), it raised an additional $3,897,000 in a registered direct offering.

Outlook, Risks, and Unusual Items

• Strategic Pivot (Acquisitions): In February 2025, the company entered into a Share Exchange Agreement to acquire Abundia Global Impact Group, LLC (AGIG) and RPD Technologies, LLC. This transaction involves issuing approximately 246 million shares (94% of post-transaction outstanding shares) to shift focus toward plastics and petrochemicals production. This requires shareholder approval and an increase in authorized shares to 300 million.
• Colombian Asset Monetization: The operator of the Colombian assets (Hupecol) is evaluating monetization of the CPO-11 block. The company has fully impaired its investment in Hupecol Meta, viewing it as no longer viable.
• Liquidity: Management believes current cash on hand ($2.96M) is sufficient to fund operations for the next 12 months. However, the company has an accumulated deficit of $85.2 million and relies on equity financing for growth.
• Internal Controls: Management concluded that disclosure controls and internal controls over financial reporting were not effective as of December 31, 2024, citing a lack of segregation of duties and insufficient accounting expertise following the CEO's assumption of CFO duties.
• Drilling Activity: Six new wells were drilled in the U.S. (Reeves County) in late 2024, with production expected to commence in Q2 2025.

Investor Verification Checklist

• Acquisition Dilution: Verify the terms of the AGIG acquisition, specifically the issuance of 246 million shares and the resulting dilution to existing shareholders.
• Colombian Investment Status: Confirm the timeline and potential recovery value of the Hupecol Meta investment, given the full impairment charge.
• Internal Control Remediation: Review the plan to address material weaknesses in internal controls over financial reporting.
• Gas Price Sensitivity: Assess the impact of the 99% drop in realized gas prices on future profitability, given the company's reliance on spot markets.
• Capital Requirements: Monitor the company's ability to fund the six new U.S. wells and the AGIG acquisition without further dilutive equity offerings.