SecProbe.io

CORRESP
1
filename1.htm

HNR Acquisition Corp.

3730 Kirby Drive, Suite
1200

Houston, TX 77098

July 10, 2023

VIA EDGAR

United States Securities and Exchange Commission

Division of Corporation Finance

Office of Energy & Transportation

100 F. Street, N.W.

Mail Stop 6010/3561

Washington, DC 20549

    Attention:
    Jenifer Gallagher, Staff Accountant

    John Cannarella, Staff Accountant

    Sandra Wall, Petroleum Engineer

    John Hodgin, Petroleum Engineer

    Liz Packebusch, Staff Attorney

    Karina Dorin, Staff Attorney

    Re:
    HNR Acquisition Corp.

    Amendment No. 2 to Preliminary Proxy Statement on
    Schedule 14A

    Filed June 16, 2023

    File No. 001-41278

Dear Miss Packebusch:

HNR Acquisition Corp. (the “Company”)
confirms receipt of the letter dated June 28, 2023, from the staff (the “Staff”) of the Securities and Exchange Commission
(the “Commission”) with respect to the above-referenced filing. Please find enclosed a complete copy of Amendment
No. 2 (“Amendment No. 3”) to the above-referenced filing (as amended by Amendment No. 3, the “Proxy Statement”).We
are responding to the Staff’s comments as set forth below. The Staff’s comments are set forth below, followed by the Company’s
response in bold:

Questions and Answers About the Purchase and
Special Meeting

Q: What happens if the Purchase is not consummated?,
page 12

    1.
    Please revise your disclosure
    to clarify that the MIPA may currently be terminated by the Seller.

RESPONSE: In response to the Staff’s
comment, the Company has revised the answer to “What happens if the Purchase is not consummated?” to clarify that the MIPA
may currently be terminated and that it is unlikely that an initial combination will be timely completed if the MIPA is terminated.

Q: Under what circumstances may the MIPA be terminated?,
page 16

    2.
    Please expand your disclosure
    to discuss that the MIPA may currently be terminated and that following the redemption of the public shares that occurred as a result
    of the special meeting of the stockholders of HNRA on May 11, 2023, you no longer have sufficient funds within the Trust account
    to complete the business combination without securing additional financing to pay the cash consideration under the current terms
    of the MIPA.

RESPONSE: In response to the Staff’s
comment, the Company has revised the answer to “Under what circumstances may the MIPA be terminated?” to clarify that the
MIPA may currently be terminated and that there are currently not sufficient funds within the Trust Account to consummate the Purchase.

Risk Factors

Unaudited Pro Forma Combined Financial Information

Note 4 – Adjustments to Unaudited Pro Forma Combined Financial
Information, page 74

    3.
    Please revise Note (D) to include details of all costs
    included in the $4,750,000 adjustment amount to Retained earnings (accumulated deficit).

RESPONSE: In response to the Staff’s comment, the
Company has revised Note (D) accordingly to reflect the impact of closing costs to accumulated deficit.

    4.
    Please revise Note (O) to provide details of the $345,833
    adjustment to General and administrative expense for the three months ended March 31, 2023 as your current disclosure is duplicative
    with Note (U) which explains the $2,883,333 adjustment to General and administrative expense for the fiscal year ended December 31,
    2022.

RESPONSE: In response to the Staff’s comment, the
Company has revised Note (O) accordingly to reflect the impact for the three months ended March 31, 2023 for these adjustments.

Proposal No. 1 – The Purchase Proposal

HNRA’s Board’s Reasons for the Approval of the Purchase,
Page 95

    5.
    The disclosure on page 96 indicates the purchase price
    of $493 million excludes an additional $293 million for “development” reserves. The disclosure also refers to a subsequent
    Cobb report that appears to include $126.4 million out of a total asset value of $519.8 million for certain Seven Rivers PUD waterflood
    reserves.

Please expand your disclosure to explain in greater detail
what comprises the additional $293 million for “development” reserves and how this figure and the $493 million purchase price
relates to the total asset value of approximately $519.8 million as of December 31, 2022.

RESPONSE: In response to the Staff’s comment, the
Company has added revised disclosure on page 96 of the Proxy Statement to include a detailed breakdown of the reserves of approximately
$493 million under the September 30, 2022 Cobb Report and the approximately $519.8 million of reserves under the December 31, 2022 Cobb
Report, which is attached as Annex E.

Fairness Opinion of RSI & Associates, Inc., page 99

    6.
    We note your response to prior comment 9 and reissue
    it in part. Please revise to discuss in greater detail each of the material analysis conducted by RSI & Associates and provide
    support for the ultimate conclusions reached in each analysis. For example, please provide qualitative and quantitative disclosure
    supporting the determination that the value estimate for Pogo using DFE was significantly higher than the proposed offering and that
    the value estimates of price to earnings exceeded the proposed offering while price to revenue fell within an acceptable range of
    value.

RESPONSE: In response to the Staff’s comment, RSI
& Associates has updated their opinion attached to the Proxy Statement as Annex C.

Management’s Discussion and Analysis of Financial Condition
and Results of Operations of  Pogo, page 134

    7.
    We note to comply with Rule
    8-08 of Regulation S-X you have updated the financial statements for both HNRA and Pogo in the preliminary proxy to include unaudited
    interim financial statements for the three months ended March 31, 2023 and 2022 as well as you have updated the related management’s
    discussion and analysis (MD&A) sections to include this interim period financial information. However, you have removed MD&A
    pertaining to Pogo’s audited financial statements for the fiscal years ended December 31, 2022 and 2021. MD&A must cover
    the financial statement periods included in the filing. Please refer to the instructions to paragraph (b) of Item 303 of Regulation
    S-K and reinsert Pogo’s MD&A information that encompasses these two most recently completed fiscal years.

RESPONSE: In response to the Staff’s
comment, the Company has added disclosure on pages 134, 135-136, and 139-146 of the Proxy Statement.

    2

Liquidity and Capital Resources, page 138

    8.
    Please disclose details of
    the agreement Pogo entered into with its banking institution on June 2, 2023 in which we understand the borrowing base was lowered
    and the hedge transaction requirement was waived.

RESPONSE: In response to the Staff’s comment, the
Company has revised page F-73 regarding disclosure of the amendment between Pogo and its banking institution.

Management’s Discussion and Analysis of Financial Condition
and Results of Operations of HNRA

Liquidity and Capital Resources and Going Concern, page 156

    9.
    We note following the redemption
    of the public shares that occurred as a result of the special meeting of the stockholders of HNRA on May 11, 2023, you no longer
    have sufficient funds within the Trust account to complete the business combination without securing additional financing to pay
    the cash consideration under the current terms of the MIPA under any of the scenarios presented. Please include a discussion of this
    liquidity issue and detail the actions being taken to secure additional financing to complete the business combination. Refer to
    Item 303(b)(1)(i) of Regulation S-K.

RESPONSE: In response to the Staff’s comment, the
Company has revised page 162 of the Proxy Statement to include disclosure regarding the Company’s plan to secure additional funding.
As noted in the response to Comment 13 below, the Company is still negotiating potential sources of funding, and once they become ripe
for disclosure, the Company will be update the Proxy Statement.

Beneficial Ownership of Securities, page 173

    10.
    We note your revised disclosure
    in response to prior comment 16 and reissue it in part. Please revise your beneficial ownership table to disclose your Sponsor’s
    current beneficial interest in voting securities as well as the expected beneficial ownership following the purchase under both the
    no redemption and maximum redemption scenarios. In that regard, we note your disclosure on page 22 and elsewhere that your Sponsor
    is the beneficial owner of 3,006,250 shares of SPAC Common Stock. In addition, please expand your beneficial ownership table to quantify
    the number of shares beneficially owned by each beneficial owner following the Purchase under both the no redemption and maximum
    redemption scenarios.

RESPONSE: In response to the
Staff’s comment, we respectfully state that 3,006,250 is the amount of stock beneficially owned by the SPAC Stockholders,
which includes shares currently held by Sponsor and shares held by Sponsor’s transferees. The Sponsor is the beneficial owner of only 122,656 shares. The Company has
otherwise updated the beneficial ownership table in the Proxy Statement to include the number of shares owned both the no redemption
and maximum redemption scenarios.

    3

Note 12. Supplemental Disclosure of Oil and Natural Gas Operations
(Unaudited) Standardized Measure of Discounted Future Net Cash Flows, page F-62

    11.
    The disclosure on pages 50 and 130 indicates the activities and
    related costs associated with your asset retirement obligations are not discretionary and must be incurred to comply with federal,
    state and local laws and regulations governing the plugging and abandonment of wells, closure or decommissioning of production facilities
    and pipelines, and site restoration. As noted in prior comment 18, each individual line item and the related components within a
    line item specific to the calculation of the standardized

    measure are required pursuant to FASB ASC 932-235-50-31 parts
    a through f. Therefore, omitting your asset retirement costs is inconsistent with the required disclosure in FASB ASC 932.

    The FASB definition of “Discounted Future Net Cash Flows
    Related to Proved Oil and Gas Reserves” notes that future cash flows related to the settlement of an asset retirement obligation
    are included in the disclosure. Furthermore, the references to FASB ASC 932-235-50-30, 50-31, and 55-6 under Amendments to the XBRL
    Taxonomy in the Accounting Standards Update, Extractive Activities-Oil and Gas (Topic 932) do not specify that selected costs may
    be excluded in the calculation based on a preconditioned

    outcome or impact based on materiality. Accordingly, we are not
    in agreement with the conclusion set forth in your response and reissue our prior comment.

    Please restate your presentation of the standardized measure for
    each period to include the undiscounted costs for dismantlement, restoration, and abandonment of the existing wells (including both
    active and inactive wells on leases) and future proved undeveloped locations, net of estimated residual salvage values, as part of
    the line item for future development costs and expand your discussion to clarify such costs are included to comply with FASB ASC
    932-235-50-36.

    This comment also applies to the comparable disclosure in the
    reserve reports included as Annex D and E, respectively. To the extent that these costs are intentionally omitted in the referenced
    reserve reports, the disclosure in each report under the section “Professional Guidelines” should be revised to clarify
    that the estimates conform to the FASB Accounting Standards Codification Topic 932 with the exception for the exclusion of future
    income taxes and property abandonment costs. Alternatively, revise each report to include these costs and modify the related discussion
    under the section “Property Abandonment.

RESPONSE: In response to the Staff’s comment, the
Company has revised its disclosure on pages 79, 120, and F-63 of the Proxy Statement, and on Appendix D and Appendix E to the Proxy Statement.

General

    12.
    We note that EF Hutton was
    an underwriter for the initial public offering of HNRA. Please tell us, with a view to disclosure, whether you have received notice,
    or any other indication, from EF Hutton or any other firm engaged in connection with your initial public offering that it will cease
    involvement in your transaction and how that may impact your deal or the deferred underwriting compensation owed for HNRA’s
    initial public offering.

RESPONSE: In response to the Staff’s comment, the
Company advises the Staff that it has not received any notice, or any other indication, from EF Hutton that EF Hutton will cease involvement
with the Company or the Purchase. EF Hutton has been actively involved in assisting the Company with closing the Purchase. Accordingly,
we anticipate honoring the deferred underwriting compensation owed for the Company’s initial public offering. The Company has also
included disclosure regarding this on page 95 of the Proxy Statement.

    4

    13.
    Please update your disclosure
    to discuss the current status of the expected amendment to the MIPA and debt financing. In that regard, we note you disclose that
    the Company is negotiating an amendment to the MIPA to adjust the Cash Consideration and increase the Seller Promissory Note amount
    issued to the Sellers by up to $10 million in the event of redemptions. We also note you disclose that you are currently negotiating
    term sheets for a debt financing and that you believe at least one offer will be documented as a written commitment by June 30, 2023.

RESPONSE: In response to the Staff’s comment, the
Company has revised pages 13, 16-17, 20, 61-62, and 91 to provide an update on a potential amendments to the MIPA for the Outside Date
and updates on additional funding. The Company has not yet executed an amendment to the MIPA or received any written commitment for additional
financing. The Company will update the Proxy Statement when such updates can be made.

We trust that this response satisfactorily responds
to your request. Should you require further information, please contact our legal counsel Matthew Ogurick at (212) 326-0243.

    Very truly yours,

    /s/
    Donald H. Goree

    Name:
    Donald H. Goree

    Title:
    Chief Executive Officer

    cc: Matthew Ogurick

5