inr-20250331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________________

FORM 10-Q

_________________________

(Mark One)


x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2025


o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-42499

_________________________

INFINITY NATURAL RESOURCES, INC.

(Exact name of registrant as specified in its charter)

_________________________


Delaware			99-3407012
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

2605 Cranberry Square, Morgantown, West Virginia			26508
(Address of Principal Executive Offices)			(Zip Code)

(304) 212-2350

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A common stock, par value $0.01 per share	INR	The New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No o

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Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes o No x

The number of shares of the Registrant’s Class A common stock and Class B common stock outstanding as of May 9, 2025 was 15,237,500 and 45,638,889, respectively.

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			Page

Cautionary Statement Regarding Forward-Looking Statements			ii
Glossary of Oil and Natural Gas Terms			iv
Part I - Financial Information			1
Item 1. Financial Statements			1
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			24
Item 3. Quantitative and Qualitative Disclosures About Market Risk			35
Item 4. Controls and Procedures			36

Part II - Other Information			37
Item 1. Legal Proceedings			37
Item 1A. Risk Factors			37
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			37
Item 3. Defaults Upon Senior Securities			37
Item 4. Mine Safety Disclosures			37
Item 5. Other Information			37
Item 6. Exhibits			38
Signatures			40

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Some of the information in this Quarterly Report on Form 10-Q (this “Quarterly Report”) may contain “forward-looking statements.” All statements, other than statements of historical fact included in this Quarterly Report regarding our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. When used in this Quarterly Report, words such as “may,” “assume,” “forecast,” “could,” “should,” “will,” “plan,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project,” “budget” and similar expressions are used to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are based on management’s current belief, based on currently available information, as to the outcome and timing of future events at the time such statement was made. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements in our Annual Report on Form 10-K for the year ended December 31, 2024 (the “2024 Form 10-K”) and in this Quarterly Report. Factors that could cause our actual results to differ materially from the results contemplated by such forward-looking statements include:

•oil, natural gas and NGL prices;

•our business strategy;

•the timing and amount of our future production of oil, natural gas and NGLs;

•our estimated proved reserves;

•our ability to achieve or maintain certain financial and operational metrics;

•our drilling prospects, inventories, projects and programs;

•actions taken by the OPEC and other allied countries (collectively known as “OPEC+”) as it pertains to the global supply and demand of, and prices for, oil, natural gas and NGLs;

•armed conflict, political instability or civil unrest in oil and gas producing regions, including instability in the Middle East and the conflict between Russia and Ukraine, and the related potential effects on laws and regulations, or the imposition of economic or trade sanctions;

•our ability to replace the reserves we produce through drilling and property acquisitions;

•the occurrence or threat of epidemic or pandemic diseases, or any government response to such occurrence or threat;

•our financial strategy, leverage, liquidity and capital required for our development program;

•our pending legal matters;

•our ability to comply with environmental, health and safety laws, regulations and obligations;

•our price differentials;

•our ability to reduce or offset our GHG emissions, including our ability to achieve carbon neutrality;

•our hedging strategy and results;

•our competition and government regulations;

•our ability to obtain permits and governmental approvals;

•our marketing of oil, natural gas and NGLs;

•our leasehold or business acquisitions;

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•our costs of developing our properties;

•general global political and economic conditions;

•credit markets;

•uncertainty regarding our future operating results; and

•our plans, objectives, expectations and intentions contained in this Quarterly Report.

We caution you that these forward-looking statements are subject to all of the risks and uncertainties incident to the development, production, gathering and sale of oil, natural gas and NGLs, most of which are difficult to predict and many of which are beyond our control. These risks include, but are not limited to, commodity price volatility; inflation; lack of availability and cost of drilling, completion and production equipment and services; supply chain disruption; project construction delays; environmental risks; drilling, completion and other operating risks; lack of availability or capacity of midstream gathering and transportation infrastructure; regulatory changes; the uncertainty inherent in estimating reserves and in projecting future rates of production, cash flow and access to capital; the timing of development expenditures, impacts of geopolitical and world health events, including trade wars; cybersecurity risks; and the other risks described under “Item 1A. Risk Factors” in this Quarterly Report and in our 2024 Form 10-K.

Reserve engineering is a process of estimating underground accumulations of hydrocarbons that cannot be measured in an exact way. The accuracy of any reserve estimates depends on the quality of available data, the interpretation of such data and price and cost assumptions made by reserve engineers. In addition, the results of drilling, testing and production activities may justify revisions of estimates that were made previously. If significant, such revisions would change the schedule of any future production and development program. Accordingly, reserve estimates may differ significantly from the quantities of oil and natural gas that are ultimately recovered.

Should one or more of the risks or uncertainties described in this Quarterly Report or our 2024 Form 10-K occur, or should underlying assumptions prove incorrect, our actual results and plans could differ materially from those expressed in any forward-looking statements.

All forward-looking statements, expressed or implied, included in this Quarterly Report are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue.

Except as otherwise required by applicable law, we disclaim any duty to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this Quarterly Report.

iii

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GLOSSARY OF OIL AND NATURAL GAS TERMS

The following are abbreviations and definitions of certain terms used in this document, which are commonly used in the oil and natural gas industry:

•“basis” means when referring to commodity pricing, the difference between the NYMEX WTI, for oil prices, and NYMEX Henry Hub, for gas prices, and the corresponding sales price at various regional sales points. The differential commonly is related to factors such as product quality, location, transportation capacity availability and contract pricing;

•“Bbl” means one stock tank barrel or 42 U.S. gallons liquid volume;

•“Boe” means one barrel of oil equivalent, calculated by converting natural gas to oil equivalent barrels at a ratio of six Mcf of natural gas to one Bbl of oil equivalent. This is an energy content correlation and does not reflect a value or price relationship between the commodities;

•“Boe/d” means one Boe per day;

•“British thermal unit” or “Btu” means a measure of the amount of energy required to raise the temperature of one pound of water by one-degree Fahrenheit;

•“collar” means a financial arrangement that effectively establishes a price range for the underlying commodity. The producer bears the risk and benefit of fluctuation between the minimum (floor) price and the maximum (ceiling) price;

•“drilled and uncompleted well” or “DUC” means a wellbore in which horizontal drilling has been completed but has yet to be stimulated through hydraulic fracturing;

•“drilling locations” means total gross locations that may be able to be drilled on our existing acreage. A portion of our drilling locations constitute estimated locations based on our acreage and spacing assumptions, as described in “Item 1. Business” of the 2024 Form 10-K;

•“gas” means natural gas;

•“hedging” means the use of derivative commodity and interest rate instruments to reduce financial exposure to commodity price and interest rate volatility;

•“Henry Hub” means the distribution hub on the natural gas pipeline system in Erath, Louisiana, owned by Sabine Pipe Line LLC;

•“horizontal drilling” means drilling that ultimately is horizontal or near horizontal to increase the length of the wellbore penetrating the target formation;

•“horizontal wells” means wells that are drilled horizontal or near horizontal to increase the length of the wellbore penetrating the target formation;

•“LNG” means liquified natural gas;

•“MBoe” means one thousand barrels of oil equivalent;

•“MBoe/d” means one thousand barrels of oil equivalent per day;

•“Mcf” means one thousand standard cubic feet of natural gas;

•“MMBtu” means one million British thermal units;

•“MMBtu/d” means one MMBtu per day;

•“MMcf” means one million standard cubic feet of natural gas;

•“natural gas liquids” or “NGLs” means hydrocarbons, in the same family of molecules as natural gas and crude oil, composed exclusively of carbon and hydrogen. Ethane, propane, butane, isobutane, and pentane are all NGLs;

•“net acres” means the percentage of total acres an owner owns or has leased out of a particular number of acres, or a specified tract. An owner who has 50% interest in 100 acres owns 50 net acres;

•“NYMEX” means the New York Mercantile Exchange;

•“option” means a contract that gives the buyer the right, but not the obligation, to buy or sell a specified quantity of a commodity or other instrument at a specific price within a specified period of time;

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•“proved developed nonproducing reserves” or “PDNP” means reserves that can be expected to be recovered through existing wells with existing equipment and operating methods but are not yet producing;

•“proved developed producing reserves” or “PDP” means reserves that can be expected to be recovered through existing wells with existing equipment and operating methods, according to the Securities and Exchange Commission or Society of Petroleum Engineers definitions of proved reserves;

•“proved reserves” means the summation of reserves within the PDP, PDNP and PUD reservoir categories;

•“proved undeveloped reserves” or “PUDs” means proved reserves that are expected to be recovered from undrilled well locations on existing acreage or from existing wells where a relatively major expenditure is required for recompletion within the five-year development window, according to the Securities and Exchange Commission or Society of Petroleum Engineers definition of PUD;

•“reservoir” means a porous and permeable underground formation containing a natural accumulation of producible oil and/or natural gas that is confined by impermeable rock and is separate from other reservoirs;

•“undeveloped acreage” means acreage under lease on which wells have not been drilled or completed;

•“well pad” or “pad” means an area of land that has been cleared and leveled to enable a drilling rig to operate in the exploration and development of a natural gas or oil well;

•“wellbore” or “well” means a drilled hole that is equipped for the production of hydrocarbons;

•“working interest” means the right granted to the lessee of a property to explore for and to produce and own oil, natural gas or other minerals. The working interest owners bear the exploration, development, and operating costs on either a cash, penalty, or carried basis; and

•“WTI” means West Texas Intermediate.

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Part I - Financial Information

Item 1. Financial Statements

INFINITY NATURAL RESOURCES, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets (Unaudited)

(amounts in thousands, except share and per share amounts)


	March 31, 2025		December 31, 2024
Assets
Current assets:
Cash and cash equivalents	$	4,859	$	2,203
Accounts receivable:
Oil and natural gas sales, net	34,044		39,314
Joint interest and other, net	15,486		32,229
Prepaid expenses and other current assets	3,362		11,822
Commodity derivative assets, short term	763		—
Total current assets	$	58,514	$	85,568
Oil and natural gas properties, full cost method (including $86.8 million and $86.5 million as of March 31, 2025 and December 31, 2024, respectively excluded from amortization)	1,017,189		933,228
Midstream and other property and equipment	43,589		40,053
Less: Accumulated depreciation, depletion, and amortization	(174,429)		(153,233)
Property and equipment, net	$	886,349	$	820,048
Operating lease right-of-use assets, net	1,309		1,389
Other assets	7,745		8,461
Total assets	$	953,917	$	915,466
Liabilities, Redeemable Interest and Stockholders’ Deficit / Members’ Equity
Current liabilities:
Accounts payable	$	46,583	$	51,370
Royalties payable	26,448		23,129
Accrued liabilities	25,567		45,903
Current portion of long-term debt	80		101
Operating lease liabilities	209		247
Commodity derivative liabilities, short-term	38,664		12,596
Total current liabilities	$	137,551	$	133,346
Long-term debt	11,391		259,406
Operating lease liabilities, net of current portion	1,098		1,142
Asset retirement obligations	3,130		2,988
Commodity derivative liabilities, long-term	18,670		10,342
Deferred tax liability, net	35		—
Total liabilities	$	171,875	$	407,224
Commitments and contingencies (Note 14)
Redeemable non-controlling interest	834,279		—
Stockholders’ deficit / members’ equity
Members’ equity	—		508,242
Class A common stock—$0.01 par value; 400,000,000 shares authorized, 15,237,500 and 0 shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively	152		—
Class B common stock—$0.01 par value; 150,000,000 shares authorized, 45,638,889 and 0 shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively	456		—
Additional paid-in capital	—		—
Accumulated deficit	(52,845)		—
Total stockholders’ deficit/ members’ equity	(52,237)		508,242
Total liabilities, redeemable interest and stockholders’ deficit / members’ equity	$	953,917	$	915,466

The accompanying notes are an integral part of these condensed consolidated financial statements.

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INFINITY NATURAL RESOURCES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations (Unaudited)

(amounts in thousands, except share and per share amounts)


	Three Months Ended March 31,
	2025		2024
Revenues:
Oil, natural gas, and natural gas liquids sales	$	84,184	$	49,839
Midstream activities	981		386
Total revenues	85,165		50,225
Operating expenses:
Gathering, processing, and transportation	12,070		10,456
Lease operating	7,434		7,288
Production and ad valorem taxes	632		359
Depreciation, depletion and amortization	21,258		15,555
General and administrative (including share-based compensation of $126.9 million and $0.0 for the three months ended March 31, 2025 and 2024, respectively)	131,750		2,128
Total operating expenses	$	173,144	$	35,786
Operating income	(87,979)		14,439
Other income (expense):
Interest, net	(3,067)		(4,573)
Loss on derivative instruments	(37,218)		(23,455)
Other (expense) income	(63)		(467)
Net loss before income tax expense (benefit)	(128,327)		(14,056)
Income tax expense	35		—
Net loss	$	(128,362)	$	(14,056)
Net income attributable to Infinity Natural Resources, LLC prior to the reorganization	9,914
Net loss attributable to redeemable non-controlling interests	(103,707)
Net loss attributable to Infinity Natural Resources, Inc.	$	(34,569)

Net loss attributable to Infinity Natural Resources, Inc. per share of Class A common stock—basic and diluted	$	(2.27)
Weighted-average shares of Class A common stock outstanding—basic and diluted	15,237,500

The accompanying notes are an integral part of these condensed consolidated financial statements.

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INFINITY NATURAL RESOURCES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Redeemable Non-controlling Interest and Stockholders’ Deficit / Members’ Equity (Unaudited)

(amounts in thousands, except share amounts)


	INR Holdings Members' Equity		Class A			Class B			Additional Paid in Capital		Accumulated Deficit		Total		Redeemable Non-controlling Interest
Three Months Ended March 31, 2025			Shares	Amount		Shares	Amount

Balance as of December 31, 2024	$	508,242	—	$	—	—	$	—	$	—	$	—	$	—	$	—
Net income prior to reorganization transactions	9,914		—	—		—	—		—		—		—
Effect of the reorganization transactions	(518,156)		—	—		45,638,889	456				—		456		517,700
Issuance of common stock in connection with initial public offering, net of underwriting discounts, commissions and other offering costs	—		15,237,500	152		—	—		198,204		—		198,356		76,911
Share-based compensation expense subsequent to reorganization transactions	—		—	—		—	—		126,895		—		126,895
Net loss subsequent to reorganization transactions	—		—	—		—	—		—		(34,569)		(34,569)		(103,707)
Adjustment of redeemable non-controlling interest to redemption value	—		—	—		—	—		(325,099)		(18,276)		(343,375)		343,375
Balance as of March 31, 2025	$	—	15,237,500	$	152	45,638,889	$	456	$	—	$	(52,845)	$	(52,237)	$	834,279


	INR Holdings Members' Equity		Class A			Class B			Additional Paid in Capital		Accumulated Deficit		Total		Redeemable Non-controlling Interest
Three Months Ended March 31, 2024			Shares	Amount		Shares	Amount

Balance as of December 31, 2023	$	458,456	—	$	—	—	$	—	$	—	$	—	$	458,456	$	—
Contribution	500		—	—		—	—		—		—		500		—
Net loss	(14,056)		—	—		—	—		—		—		(14,056)		—
Balance as of March 31, 2024	$	444,900	—	$	—	—	$	—	$	—	$	—	$	444,900	$	—

The accompanying notes are an integral part of these condensed consolidated financial statements.

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INFINITY NATURAL RESOURCES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows (Unaudited)

(amounts in thousands)


	Three Months Ended March 31,
	2025		2024
Cash flows from operating activities:
Net loss	$	(128,362)	$	(14,056)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation, depletion, and amortization	21,258		15,555
Amortization of debt issuance costs	527		477
Share-based compensation expense	126,895		—
Loss on derivative instruments	37,218		23,455
Cash received (paid) on settlement of derivative instruments	(3,585)		13,263
Non-cash lease expense	80		(5)
Deferred income tax	35		—
Changes in operating assets and liabilities:
Accounts receivable	22,013		15,240
Prepaid expenses and other assets	(1,151)		33
Accounts payable	(978)		(21,598)
Royalties payable	3,319		(3,382)
Accrued and other expenses	(4,707)		1,046
Other assets and liabilities	1,667		127
Net cash provided by operating activities	$	74,229	$	30,155
Cash flows from investing activities:
Additions to oil and gas properties	(105,665)		(36,327)
Additions to midstream and other property and equipment	(2,766)		(1,856)
Net cash used in investing activities	$	(108,431)	$	(38,183)
Cash flows from financing activities:
Proceeds from capital contributions	—		500
Borrowings under revolving credit facility	56,000		43,500
Payments on revolving credit facility	(304,000)		(34,000)
Proceeds issuance of Class A common stock in initial public offering, net of underwriting discounts and commissions	286,465		—
Payments of debt issuance costs	(645)		—
Payments of initial public offering costs	(925)		—
Payments on notes payable	(37)		(33)
Net cash provided by financing activities	$	36,858	$	9,967
Net increase in cash and cash equivalents	2,656		1,939
Cash and cash equivalents at beginning of period	2,203		1,504
Cash and cash equivalents at end of period	$	4,859	$	3,443

The accompanying notes are an integral part of these condensed consolidated financial statements

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INFINITY NATURAL RESOURCES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

Note 1 – Description of the Business and Basis of Presentation

Description of Business. Infinity Natural Resources, Inc., together with its subsidiaries (collectively referred to as “INR”, the “Company,” “we,” “our,” or “us”, unless the context otherwise indicates), was incorporated in the state of Delaware on May 15, 2024 in anticipation of a potential initial public offering and related reorganization transactions. The Company is an oil and natural gas exploration and production company engaged in the acquisition, exploration, and development of properties for the production of oil, natural gas, and natural gas liquids (“NGLs”) from underground reservoirs. Our operations are located in the Appalachian Basin in the northeastern United States.

Initial Public Offering. On January 30, 2025, the Company's registration statement on Form S-1 relating to its initial public offering (“IPO”) was declared effective by the Securities and Exchange Commission (“SEC”), and the shares of its Class A common stock, par value $0.01 per share (“Class A common stock”), began trading on the New York Stock Exchange (“NYSE”) on January 31, 2025. The IPO closed in February 2025, pursuant to which the Company issued and sold 15,237,500 shares of its Class A common stock at a public offering price of $20.00 per share, including 1,987,500 shares issued pursuant to the full exercise of the underwriters’ option to purchase additional shares. The Company received net proceeds of approximately $286.5 million, after deducting underwriting discounts and commissions of $18.3 million. The Company contributed the net proceeds of the IPO to Infinity Natural Resources, LLC (“INR Holdings”), and INR Holdings used the net proceeds, after payment of certain offering expenses, to repay borrowings outstanding under its revolving credit facility.

Corporate Reorganization. In connection with the IPO, we underwent a corporate reorganization whereby: (a) the membership interests of the existing owners (the “Legacy Owners”) in INR Holdings were recapitalized into a single class of units (the “INR Units”), and, in exchange for their existing membership interests, the Legacy Owners received INR Units and an equal number of shares of the Company’s Class B common stock, par value $0.01 per share (“Class B common stock”); and (b) we contributed the net proceeds of the IPO to INR Holdings in exchange for newly issued INR Units and a managing member interest in INR Holdings (the “Corporate Reorganization”). After giving effect to the Corporate Reorganization and the IPO, we own an approximate 25.0% interest in INR Holdings and the Legacy Owners own an approximate 75.0% interest in INR Holdings. Pursuant to the Second Amended and Restated Limited Liability Company Agreement of INR Holdings (the “INR Holdings LLC Agreement”), holders of INR Units (other than INR) are entitled to exchange their INR Units, and surrender an equivalent number of shares of Class B common stock, for a number of shares of Class A common stock on a one-for-one basis or, at our option, the receipt of an equivalent amount of cash.

The Company is a holding company whose sole material asset consists of membership interests in INR Holdings. The Company is the managing member of INR Holdings and controls and is responsible for all operational, management and administrative decisions relating to INR Holdings’ business and consolidates the financial results of INR Holdings and reports redeemable non-controlling interests in its consolidated financial statements related to the INR Units that the Legacy Owners own in INR Holdings.

The historical consolidated financial statements included in this Quarterly Report for periods prior to the Corporate Reorganization and IPO are based on the financial statements of our predecessor, INR Holdings. The historical financial data of our predecessor may not yield an accurate indication of what our actual results would have been if the Corporate Reorganization and IPO had been completed at the beginning of the periods presented or of what our future results of operations are likely to be.

Basis of Accounting and Presentation. The accompanying unaudited condensed consolidated financial statements present the financial position, results of operations, and cash flows of the Company in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and regulations of the SEC for interim financial information. Certain information and disclosures normally included in consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. Accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2024 and the related notes included in the Company’s 2024 Form 10-K. The December 31, 2024, condensed consolidated balance sheet was derived from the Company’s audited consolidated financial statements as of that date. In the opinion of management, all adjustments, consisting of normal recurring adjustments considered necessary for a fair presentation of interim financial information, have been included. The unaudited results of operations for the interim periods reported are not necessarily indicative of results to be expected for the full year.

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INFINITY NATURAL RESOURCES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

The Company had no material other comprehensive income or loss items. Accordingly, a separate statement of comprehensive loss has not been presented in these unaudited condensed consolidated financial statements. All intercompany balances and transactions are eliminated upon consolidation.

Note 2 – Summary of Significant Accounting Policies

The selected significant accounting policies included below are policies that were adopted or modified during the three months ended March 31, 2025, as a result of the IPO or the adoption of new accounting policies. Refer to Note 2 – Summary of Significant Accounting Policies of our 2024 Form 10-K for the full list of our significant accounting policies.

Use of Estimates. The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company evaluates these estimates on an ongoing basis, using historical experience, consultation with experts and other methods it considers reasonable in the particular circumstances. Actual amounts could differ from these estimates, and changes in these estimates are recorded when known. Estimates significant to our consolidated financial statements include the following:

•proved reserves used in calculating depletion;

•estimates of accrued revenues and unbilled costs;

•future cash flows from proved oil and natural gas reserves used in the impairment assessment;

•derivative financial instruments;

•asset retirement obligations;

•the fair value of share-based compensation awards; and

•estimates related to the tax receivable agreement.

Redeemable Non-controlling Interest. Redeemable non-controlling interests are presented within our unaudited condensed consolidated balance sheet as of March 31, 2025 as mezzanine equity as they are redeemable upon the occurrence of an event that is not solely within our control. The carrying amount of the redeemable non-controlling interest is equal to the greater of (1) the carrying value of the non-controlling interest adjusted each reporting period for income or loss attributable to the non-controlling interest or (2) the redemption value. Remeasurements to the redemption value of the redeemable non-controlling interest are recognized in additional paid-in capital within the unaudited condensed consolidated balance sheet as of March 31, 2025. The redemption amount is calculated based on the 5-day volume-weighted average closing price (“VWAP”) of Class A common stock at the end of each reporting period. The portion of the net income or loss attributable to redeemable non-controlling interest is reported as net income or loss attributable to redeemable non-controlling interests on our unaudited condensed consolidated statement of operations for the three months ended March 31, 2025.

Income Taxes. Following the completion of the IPO, the Company became subject to U.S. federal, state, and local income taxes on its share of taxable income earned through its interest in INR Holdings, which is treated as a pass-through entity for income tax purposes. INR Holdings itself is generally not subject to federal income tax, and instead, its income or loss is allocated to its members. INR Holdings may be subject to certain entity-level taxes imposed by specific states or jurisdictions. The Company uses the liability method to account for income taxes in accordance with ASC 740. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences of differences between the financial reporting and tax bases of assets and liabilities. Deferred tax amounts are calculated using the enacted tax rates expected to be in effect when the temporary differences reverse. Deferred tax assets are recorded when it is considered more likely than not that they will be realized. The Company evaluates the need for a valuation allowance by considering all available evidence, including projections of future taxable income, the timing of temporary difference reversals, the existence of tax planning strategies and historical operating results. The Company evaluates uncertain tax positions using a recognition and measurement approach. A tax position is recognized in the financial statements only if it is more likely than not that the position would be sustained upon examination by the relevant taxing authority. The amount recognized is based on the largest amount of tax benefit that has a greater than 50% likelihood of being realized. Changes in recognition

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or measurement are reflected in the period in which the change in judgment occurs. Interest and penalties, if incurred, are recorded in income tax expense.

Tax Receivable Agreement. In connection with the IPO and related transactions, the Company entered into a Tax Receivable Agreement (“TRA”) with the Legacy Owners, which generally provides for the payment by us to the Legacy Owners of 85% of the net cash savings, if any, in U.S. federal, state and local income tax that we (a) actually realize with respect to taxable periods ending after the IPO or (b) are deemed to realize in the event of a change of control (as defined under the TRA, which includes certain mergers, asset sales and other forms of business combinations and certain changes to the composition of our board of directors) or the TRA terminates early (at our election or as a result of our breach) with respect to any taxable periods ending on or after such change of control or early termination event, in each case, as a result of (i) the tax basis increases resulting from the exchange of INR Units and the corresponding surrender of an equivalent number of shares of Class B common stock by the Legacy Owners for a number of shares of Class A common stock on a one-for-one basis or, at our option, the receipt of an equivalent amount of cash pursuant to the INR Holdings LLC Agreement and (ii) deductions arising from imputed interest deemed to be paid by us as a result of, and additional tax basis arising from, any payments we make under the TRA. The Company recognizes a liability for the estimated amounts payable under the TRA when it is probable that taxable income will be sufficient to realize the related tax benefits and the amounts can be reasonably estimated. The liability is measured using a “with and without” approach and is reassessed at each reporting period, with changes in estimates recognized in income tax expense. See Note 9 – Income Taxes and Tax Receivable Agreement for further details.

(Loss) Earnings per Share. Basic (loss) earnings per share is calculated by dividing net (loss) income attributable to Infinity Natural Resources, Inc. by the weighted average number of shares of Class A common stock outstanding during the period. Diluted net (loss) earnings per share gives effect, when applicable, to unvested restricted stock units and performance stock units granted under the Plan (as defined in Note 11 – Share-based Compensation) and the exchange of INR Units (and the cancellation of an equal number of shares of Class B common stock) held by the Legacy Owners into Class A common stock. The Company uses the “if-converted” method to determine the potential dilutive effect of exchanges of INR Units (and the cancellation of an equal number of shares of Class B common stock), and the treasury stock method to determine the potential dilutive effect of vesting of outstanding equity awards.

Share-based Compensation. The Company accounts for share-based compensation in accordance with ASC 718, Compensation — Stock Compensation (“ASC 718”). Share-based awards, including restricted stock units and performance stock units, are measured at their grant-date fair value and recognized as compensation expense on a straight-line basis over the requisite service period, which generally corresponds to the vesting period of the award.

For restricted stock units, fair value is determined based on the closing stock price of the Company’s Class A common stock on the grant date. For performance stock units with market-based vesting conditions, fair value is estimated using a Monte Carlo simulation model and is not subsequently remeasured. Compensation expense for market-based awards is recognized regardless of whether the market condition is ultimately satisfied, provided the requisite service condition is met. The Company accounts for forfeitures as they occur.

Adoption of New Accounting Standards. In March 2024, the FASB issued ASU 2024-01, Compensation-Stock Compensation (Topic 718). This ASU illustrates how to apply the scope guidance to determine whether a profits interest award should be accounted for as a share-based payment arrangement under Accounting Standards Codification (“ASC”) 718 or another accounting standard. The amendments in this update are effective for public entities for fiscal years beginning after December 15, 2024. As of March 31, 2025, we adopted the provisions of this amendment in our condensed consolidated financial statements. See Note 11 – Share-based Compensation for further details.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) – Improvements to Income Tax Disclosures (“ASU 2023-09”), which requires that certain information in a reporting entity’s tax rate reconciliation be disaggregated and provides additional requirements regarding income taxes paid. The amendments are effective for annual periods beginning after December 15, 2024, with early adoption permitted, and should be applied either prospectively or retrospectively. While the adoption of this ASU will modify the Company’s disclosures, it will not have an impact on the Company’s condensed consolidated balance sheets or statements of income or cash flows in its condensed consolidated financial statements. Please see Note 9 – Income Taxes and Tax Receivable Agreement for further details.

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Accounting Standards Not Yet Adopted. In November 2024, the FASB issued ASU 2024-03 - Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40). This ASU requires entities to disaggregate any relevant expense caption presented on the face of the income statement within continuing operations into the following required natural expense categories within the footnotes, as applicable: (1) purchases of inventory, (2) employee compensation, (3) depreciation, (4) intangible asset amortization, and (5) DD&A recognized as part of oil- and gas-producing activities or other depletion expenses. The amendments in this ASU are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of the adoption of this guidance

We considered the applicability and impact of all ASUs. ASUs not listed above were assessed and determined to be either not applicable or not material upon adoption.

Note 3 – Revenues

Crude oil, natural gas, and NGL sales are recognized at the point that control of the product is transferred to the customer. Virtually all of the Company’s contract pricing provisions are tied to a market index, with certain adjustments based on, among other factors, transportation costs to an active spot market and quality differentials.

Commodity sales revenues presented within the consolidated statements of operations relate to the sale of oil, natural gas, and NGLs as shown below:


	For the Three Months Ended March 31,
	2025		2024
(in thousands)
Oil revenues	$	47,046	$	27,141
Natural gas revenues	22,849		13,317
NGL revenues	14,289		9,381
Oil, natural gas, and NGL sales	$	84,184	$	49,839

Oil Sales

Our crude oil sales contracts are generally structured whereby oil is delivered to the customer at a contractually agreed-upon delivery point. This delivery point is usually at the wellhead or at the inlet of a transportation pipeline. Revenue is recognized when control transfers to the customer at the delivery point based on the net price received from the customer. Any downstream transportation or marketing costs incurred by purchasers of our crude oil are reflected in the price we receive and are presented as a net reduction to oil sales revenues.

Natural Gas and NGL Sales

Under the Company’s natural gas processing contracts, liquids rich natural gas is delivered to a midstream gathering and processing entity at an agreed upon delivery point. The midstream entity gathers and processes the raw gas and then remits proceeds to the Company. For these contracts, the Company evaluates when control of the residue gas and NGLs is transferred in order to determine whether revenues should be recognized on a gross or net basis. Where the Company elects to take its residue gas and/or NGL production “in-kind” at the plant tailgate, fees incurred prior to transfer of control at the outlet of the plant are presented as gathering, processing, and transportation expense within the consolidated statements of operations. Where the Company does not take its residue gas and/or NGL production “in-kind”, transfer of control typically occurs at the inlet of the midstream entity’s gas gathering system such that any fees incurred subsequent to the delivery point are reflected as a net reduction to natural gas and NGL revenues presented in the table above and as included within oil, natural gas, and natural gas liquids sales within the consolidated statements of operations.

Performance Obligations

The Company’s commodity sales contracts do not originate until production occurs and, therefore, are not considered to exist beyond each day’s production. Therefore, there are no remaining performance obligations under any of its commodity sales contracts. Under our revenue agreements, each delivery generally represents a separate performance

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obligation; therefore, future volumes delivered are wholly unsatisfied and disclosure of the transaction price allocated to remaining performance obligations is not required.

For all commodity products, we record revenue in the month production is delivered to the purchaser. Settlement statements for crude oil are generally received within 30 days following the date that production volumes are delivered, but for natural gas and NGL sales, statements may not be received for 30 to 60 days after delivery has occurred. However, payment is unconditional once the performance obligations have been satisfied. At such time, the volumes delivered and sales prices can be reasonably estimated and amounts due from customers are accrued in Accounts receivable – oil and natural gas sales, net in the condensed consolidated balance sheets. As of March 31, 2025 and December 31, 2024, such receivable balances were $34.0 million and $39.3 million, respectively.

The Company has certain gathering service agreements that are structured with minimum volume commitments (“MVCs”), which specify minimum quantities that the customer will be charged regardless of whether such quantities are gathered. Revenue is recognized for MVCs when the performance obligation has been met, which is the earlier of when the gas is gathered or when the likelihood that the customer will be able to meet its MVC is remote. If a customer fails to meet its MVC for a specified period, the customer is obligated to pay a contractually-determined fee based on the shortfall between actual volume gathered and the MVC.

Note 4 – Property, Plant, and Equipment

Oil and Natural Gas Properties

We utilize the full cost method of accounting for costs related to the exploration, development, and acquisition of oil and natural gas properties. Our capitalized costs of oil and natural gas properties and the related accumulated depreciation, depletion, and amortization as of March 31, 2025 and December 31, 2024 are as follows:


	March 31, 2025		December 31, 2024
(in thousands)
Oil and natural gas properties:
Proved properties	$	930,402	$	846,738
Unproved properties	86,787		86,490
Gross oil and natural gas properties	1,017,189		933,228
Less: accumulated depreciation, depletion, and amortization	(169,215)		(148,638)
Oil and natural gas properties, net	$	847,974	$	784,590

Under the full cost method of accounting, the Company is required to perform a ceiling test each quarter which determines a limit, or ceiling, on the book value of proved oil and natural gas properties. No impairment expense was recorded for the three months ended March 31, 2025 based on the results of the respective quarterly ceiling tests.

Capitalized costs of oil and natural gas properties are subject to a ceiling test that limits such pooled costs, net of applicable deferred taxes, to the aggregate of the present value of future net revenues attributable to proved oil, natural gas, and NGL reserves discounted at 10%. Any costs in excess of the ceiling are written off as a non-cash expense. The expense may not be reversed in future periods, despite commodity price increases which subsequently increase the ceiling. Companies using the full cost method are required to use the average quoted price from the first day of each month from the previous 12 months, including the impact of derivatives designated for hedge accounting, to calculate the ceiling value of reserves. Historically, we have not designated any of our derivative contracts as cash flow hedges.

Capitalized costs of proved properties are computed on a units-of-production basis based on estimated proved reserves, whereby the depletion rate is determined by dividing the total unamortized cost base plus future development costs by estimated proved reserves on a net equivalent basis at the beginning of the period. The depletion rate is multiplied by total production for the period to compute depletion expense. The following table shows our depletion expense for the three months ended March 31, 2025 and 2024 related to oil and gas properties and average depletion rate per Boe:

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	For the Three Months Ended March 31,
(in thousands, except per Boe amounts)	2025		2024
Depletion of Proved Oil and Natural Gas Properties	$	20,577	$	15,049
Average Depletion Rate per Boe	$	8.68	$	7.83

Costs associated with unproved properties are excluded from the amortization base until the properties are evaluated or impairment is indicated. The costs associated with unproved leasehold acreage and related seismic data, wells currently drilling and related capitalized interest are initially excluded from the amortization base. Leasehold costs are either transferred to the amortization base with the costs of drilling a well on the lease or are assessed at least annually for possible impairment or reduction in value.

Our decision to exclude costs from amortization and the timing of the transfer of those costs into the amortization base involves judgment and may be subject to changes over time based on numerous factors, including drilling plans, availability of capital, project economics, and drilling results from adjacent acreage.

Costs of unproved properties excluded from amortization consist of leasehold acreage and relate to properties which are not individually significant for which the evaluation process has not been completed. The timing and amount of property acquisition and seismic costs included in the amortization computation will depend on the location and timing of drilling wells, results of drilling, and other assessments. Therefore, we are unable to estimate when these costs will be included in the amortization computation.

Other Property and Equipment

Our other property and equipment consists of the following assets that are recorded at cost and depreciated on a straight-line basis over the respective estimated useful lives.


	March 31, 2025		December 31, 2024
(in thousands)
Midstream assets	$	40,334	$	36,880
Vehicles	1,878		1,815
Furniture, fixtures, and office equipment	770		751
Leasehold improvements	607		607
Gross midstream and other property and equipment	43,589		40,053
Less: Accumulated depreciation	(5,214)		(4,595)
Total midstream and other property and equipment, net	$	38,375	$	35,458

The estimated useful lives of other property and equipment depreciated on a straight-line basis are as follows:


Midstream assets			5 – 25 years
Vehicles			5 years
Furniture, fixtures, and office equipment			3 – 10 years
Leasehold improvements			5 years

The carrying value of long-lived assets that are not part of the Company’s full cost pool are evaluated for recoverability whenever events or changes in circumstances indicate that such carrying values may not be recoverable. Should an impairment exist, the impairment loss would be measured as the amount that the asset’s carrying value exceeds its fair value. We did not recognize any impairment during the three months ended March 31, 2025 and 2024. Total depreciation expense for the three months ended March 31, 2025 and 2024 totaled approximately $0.6 million and $0.5 million, respectively.

Note 5 – Accrued Liabilities

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The Company’s accrued liabilities as of March 31, 2025 and December 31, 2024 consisted of the following amounts:


	March 31, 2025		December 31, 2024
(in thousands)
Accrued interest expense	$	88	$	261
Accrued capital expenditures	10,832		27,234
Accrued lease operating expenses	976		1,898
Accrued offering costs	5,284		4,849
Accrued general and administrative expenses	1,835		3,293
Accrued severance and ad valorem taxes	318		1,263
JIB advance deposits	5,457		6,188
Other accrued liabilities	777		917
Total accrued liabilities	$	25,567	$	45,903

Note 6 – Debt

On September 25, 2024, INR Holdings entered into a credit facility led by Citibank, N.A. (the “Credit Facility” and the credit agreement governing the Credit Facility, the “Credit Agreement”) with a syndicate of financial institutions with an initial aggregate elected commitment amount and initial borrowing base of $325,000,000. On March 31, 2025, the Company amended the Credit Agreement to, among other things, increase each of the aggregate elected commitment amount and borrowing base from $325,000,000 to $350,000,000. The borrowing base is based on the net present value of our oil and gas properties and is subject to semi-annual redeterminations. The Credit Facility is guaranteed by INR Holdings’ subsidiaries and is secured by first priority security interests on substantially all of INR Holdings’ consolidated assets.

Borrowings under the Credit Facility may be base rate loans or Secured Overnight Financing Rate (“SOFR”) loans. Base rate loans bear interest at a rate per annum equal to the greater of: (i) the administrative agent bank’s prime rate; (ii) the federal funds effective rate plus 50 basis points; or (iii) the adjusted Term SOFR rate (as defined in the Credit Agreement), plus an additional basis point credit spread, plus an applicable margin ranging from 275 basis points to 375 basis points, depending on the percentage of the borrowing base utilized. SOFR loans bear interest at SOFR plus an applicable margin ranging from 275 basis points to 375 basis points, depending on the percentage of the borrowing base utilized, plus an additional basis point credit spread. We also pay a commitment fee on unused elected commitment amounts under the Credit Facility, which is also dependent on the percentage of the borrowing base utilized. Interest is payable quarterly for base rate loans and at the end of the applicable interest period for SOFR loans. The Credit Facility matures in September 2028. As of March 31, 2025, the Company’s reserves supported a $350.0 million borrowing base of which $11.3 million was outstanding, leaving $338.7 million of unused capacity.

For the three months ended March 31, 2025 and 2024, total interest expense on the Credit Facility was $2.6 million and $4.1 million, respectively. We did not capitalize any interest expense for the three months ended March 31, 2025 and 2024. For the three months ended March 31, 2025 and 2024, the Company’s weighted-average interest rate was 5.2% and 8.9%, respectively.

Debt issuance costs associated with the Credit Facility are capitalized and presented as other assets within the unaudited condensed consolidated balance sheets. Because debt issuance costs are related to a line of credit, they are presented as an asset, rather than an offset to the corresponding liability. Debt issuance costs are amortized using the straight-line method over the term of the related agreement. We did not capitalize additional debt issuance costs related to the Credit Facility for the three months ended March 31, 2025. As of March 31, 2025 and December 31, 2024, capitalized debt issuance costs were approximately $7.7 million and $7.9 million, respectively. Amortization of debt issuance costs, which is included within interest expense in the condensed consolidated statements of operations, was approximately $0.5 million and $0.6 million for the three months ended March 31, 2025 and 2024, respectively.

The Credit Facility also requires us to maintain compliance as of the end of each fiscal quarter with financial covenants consisting of a current ratio of not less than

SEC Form 10-Q filed by Infinity Natural Resources Inc.