EON Resources’ wholly owned subsidiary EON Energy has entered into an agreement to acquire a 94% working interest in the South Justis oilfield in the prolific Permian Basin in Lea County, New Mexico.

The acquisition, which includes 207 million barrels of original oil in place across 5,360 acres, is set to bolster EON Energy's production capabilities.

The sale and purchase agreement involves EON Energy exchanging one million Class A common shares of EON Resources, with no cash consideration or debt.

This strategic move is expected to bring an estimated $1.2m in net annual cash flow and is projected to be accretive.

South Justis currently produces 108 barrels of oil per day (boepd) from 19 actively producing wells.

The South Justis field's proximity to EON Energy's existing Grayburg-Jackson field in Eddy County, New Mexico, is expected to allow for operational efficiencies and economies of scale.

EON Resources CEO and president Dante Caravaggio said: "Step one in development of South Justis Field is to return idle wells to production to double oil production. Step two is to stimulate existing wellbores using the same techniques the company successfully employs in our Grayburg Jackson Field.

"We also plan to seek a drilling partner who will bring the necessary capital and expertise to develop the South Justis Field, with the same approach we are taking with our Grayburg Jackson Oil Field."

The initial production from the South Justis field was 6,000boepd in the 1960s. The field produced a steady 250boepd prior to wells going offline because of mechanical issues.

Six wells were repaired and reactivated to production within the past three months, adding 50boepd with minimal costs.

EON Energy aims to return 30 wells to production this year with an estimated average of 5–10boepd per well, yielding field-wide production of 250–400boepd.