MORGAN EP INC (Tables)

12 Months Ended

Dec. 31, 2025

MORGAN EP INC

Schedule of Condensed Balance Sheets

in thousands
		December 31, 2025				December 31, 2024

Assets:
Cash		$	18			$	15
Revenue receivables			—				343
Joint interest billing receivables			2,014				1,738
Other receivables			49				2
Prepaids and other current assets			72				35
Current assets			2,153				2,133

Property, plant and equipment
Oil and gas properties, net - full cost method			11,644				6,959
Other property, plant and equipment			23				34
Total property, plant and equipment - net			11,667				6,993

Other noncurrent assets
Operating lease right-of-use assets, net			185				227
Total noncurrent assets			185				227

Total assets		$	14,005			$	9,353

Liabilities, Member's and Stockholder's Deficit

Current liabilities
Accounts payable		$	6,263			$	6,656
Revenue payable			214				319
Short-term loan payable			2,958				—
Current portion of operating lease liabilities			54				47
Deferred income			5				—
Due to parent			1,148				550
Note payable - Due to parent			10,500				—
Accrued liabilities			10,544				3,162
Accrued liabilities - Due to parent			2,749				—
Total current liabilities			34,435				10,734

Long-term liabilities
Asset retirement obligations			5				4
Long-term operating lease liabilities			153				207
Note payable - Due to parent			—				10,500
Long-term accrued liabilities - Due to parent			—				1,471
Total long-term liabilities			158				12,182
Total liabilities			34,593				22,916

Commitments and Contingencies (Note 9 and Note 10)

Member's deficit			—				(13,563	)

Stockholder's deficit
Preferred stock, $0.001 par value, 10,000,000 shares authorized, zero shares issued at December 31, 2025			—				—
Common stock, $0.001 par value, 100,000,000 shares authorized 6,800,000 shares issued at December 31, 2025			7				—
Common stock discount			(7	)			—
Accumulated deficit			(20,588	)			—
Total stockholder's deficit			(20,588	)			—

Total liabilities, member's and stockholder's deficit		$	14,005			$	9,353

Schedule of Condensed Statements of Operations

		Year Ended December 31,								Period from inception (April 3, 2023 through December 31,)
		2025				2024				2023

Oil and gas revenue		$	177			$	2,710			$	270

Operating costs and expenses
Lease operating			798				2,694				268
Production and ad valorem taxes			13				261				27
Marketing, transportation and gathering			34				85				—
Depreciation, depletion and amortization			170				1,467				60
Accretion			1				1				—
Impairment of oil and gas properties			2,018				6,678				—
Bad debt expense			282				—				—
General and administrative			1,980				2,042				1,510
Total operating costs and expenses			5,296				13,228				1,865

Other income (expense)
Interest income			—				6				16
Rental income			20				—				—
Other income			7				—				—
Interest expense			(1,933	)			(1,247	)			(225	)
Total other income (expense), net			(1,906	)			(1,241	)			(209	)
Net loss		$	(7,025	)		$	(11,759	)		$	(1,804	)

Schedule of Condensed Statements of Cash Flows

		Year Ended December 31,								Period from inception (April 3, 2023) through December 31
		2025				2024				2023
Cash flows from operating activities
Net loss		$	(7,025	)		$	(11,759	)		$	(1,804	)
Adjustments to reconcile net loss to cash flows used in operating activities
Depreciation, depletion and amortization			170				1,467				61
Amortization of deferred financing costs			33				—				—
Amortization of right-of-use asset			42				43				12
Accretion			1				1				—
Provision for credit losses			282				—				—
Impairment of oil and gas properties			2,018				6,678				—
Changes in operating assets and liabilities
Accounts receivable – oil and natural gas sales			61				121				(464	)
Accounts receivable – joint interest billings			(276	)			(1,508	)			(291	)
Other receivables			(47	)			(2	)			—
Prepaids and other current assets			(37	)			98				(133	)
Accounts payable			(393	)			4,284				85
Revenue payable			(105	)			518				221
Prepayments from owners			—				—				1,701
Due to parent			598				537				13
Current portion of operating lease liabilities			(47	)			(28	)			—
Accrued liabilities			567				(3,772	)			810
Accrued liabilities - due to parent			1,278				1,246				225
Net cash used in operating activities			(2,880	)			(2,076	)			436
Cash flows from investing activities
Capital expenditures			(42	)			(2,597	)			(5,700	)
Acquisition of oil and gas properties			—				—				(500	)
Additions to other property, plant and equipment			—				—				(48	)
Net cash used in investing activities			(42	)			(2,597	)			(6,248	)
Cash flows from financing activities
Proceeds from note payable - affiliate			—				2,247				8,253
Proceeds from short-term debt			3,000				—				—
Deferred financing costs paid			(75	)			—				—
Cash flows provided by financing activities			2,925				2,247				8,253

Net change in cash			3				(2,426	)			2,441
Beginning of year			15				2,441				—

End of year		$	18			$	15			$	2,441
Supplemental disclosure of cash flow information
Cash paid for interest		$	100			$	—			$	—
Noncash investing and financing activities:
Operating lease right-of-use assets		$	—			$	—			$	(282	)
Acquisition of oil and natural gas working interests funded by accrued liabilities		$	—			$	(3,019	)		$	—
Capital expenditures funded by accrued liabilities		$	6,820			$	849			$	4,181
Prepayments applied to joint interest		$	—			$	122			$	1,579
Change in asset retirement costs		$	—			$	(1	)		$	4