Energy 11, L.P. SEC Filing Summary (Fiscal Year Ended December 31, 2025)

Considering an investment in Energy 11, L.P.? This summary cuts through the jargon to provide essential facts about the company's performance for the fiscal year ended December 31, 2025, and highlights crucial insights for potential investors. Understand their business and the associated risks before making a decision.

Key Takeaways for Investors

Energy 11, L.P. actively develops oil and gas properties. In 2024, significant drilling boosted its reserves, but 2025 brought a slight decline due to existing well performance and commodity prices. While the company develops assets, investors should be aware of several critical points:

• The illiquid nature of the investment, meaning no public market exists to sell units.
• Significant reliance on volatile oil and gas prices.

Business Overview

Energy 11, L.P. operates as a limited partnership primarily focused on acquiring, exploring, developing, and producing oil and natural gas properties. Its core operations involve identifying and developing hydrocarbon reserves, mainly within the Sanish Field. The company's strategy emphasizes optimizing existing assets and converting proved undeveloped reserves (PUDs) into producing assets through targeted drilling programs. As a limited partnership, its structure includes general and limited partners, with the general partner typically managing operations. The company's success directly depends on its ability to efficiently extract and market oil and natural gas.

Management Discussion & Analysis (MD&A) Highlights

The Management Discussion and Analysis (MD&A) section usually explains a company's financial condition and operational results. It does provide key operational highlights and aspects of the capital structure.

Operational Highlights: Their "Oil & Gas Bank Account" (Reserves & Production)

For an energy company, reserves represent its future income. "MBOE" stands for "thousand barrels of oil equivalent," a standard measure for combined oil and gas.

Proved Reserves as of December 31, 2025:

• Net Decrease: Proved reserves decreased by approximately 774,000 MBOE in 2025.
• Key factors contributing to this decrease included:
  • Existing Well Performance: A negative adjustment of 773,000 MBOE, indicating older wells produced less than previously estimated.
  • Lower Commodity Prices: A negative adjustment of 99,000 MBOE, as reduced oil, natural gas, and NGL prices made some reserves less economic to recover.
• Offsetting Additions: Changes in the company's future drilling schedule added back approximately 98,000 MBOE to proved reserves.
• Future Potential (PUDs): Proved Undeveloped Reserves (PUDs) saw a small positive revision of 69,000 MBOE. Updated drilling plans primarily drove this, helping to mitigate some negative adjustments from gas processing and prices.

Proved Reserves as of December 31, 2024 (compared to December 31, 2023):

• Significant Net Increase: Proved reserves increased by approximately 3.3 million MBOE in 2024.
• Key factors contributing to this increase included:
  • Improved Recovery & Drilling Plans: A substantial positive adjustment of 4.4 million MBOE, reflecting better recovery expectations from existing areas and optimized drilling plans.
  • Successful Drilling: The company completed 15 new wells in 2024, converting about 1.5 million MBOE from PUDs (future drilling spots) into proved developed reserves (actively producing).
  • New Discoveries: Successful drilling in its Sanish Field Assets added an additional 152,000 MBOE.
• Future Potential (PUDs): PUDs also saw a significant positive revision of about 4.3 million MBOE in 2024, mainly due to better drilling plans.
• Negative Impacts: Some wells underperformed, and lower oil and gas prices had a minor negative impact on reserve estimates.

Strategy & Operations: Energy 11, L.P. actively drills and develops properties, notably focusing on the Sanish Field. Its strategy appears to involve optimizing existing assets and converting PUDs into producing reserves through targeted drilling.

Capital Structure & Distributions As of March 13, 2026, Energy 11, L.P. has 18,973,474 common units outstanding.

Distribution Policy: A significant point for investors is that distributions to unitholders might not always come solely from cash generated by operations. The company indicates it could sometimes fund distributions by borrowing money. While this can maintain short-term payouts, it is generally not a sustainable long-term strategy. It can lead to increased debt, reduced financial flexibility, and potentially smaller or suspended future distributions as the company diverts capital to debt repayment instead of operational reinvestment. Furthermore, there is no guarantee of a specific return on investment.

Future Outlook

Energy 11, L.P.'s future outlook primarily stems from its strategy to optimize existing assets and convert proved undeveloped reserves (PUDs) into producing assets through targeted drilling programs. This involves continuously evaluating drilling opportunities and reservoir performance within its operating areas, especially the Sanish Field. The company's ability to effectively execute this strategy will depend on several factors, including commodity price stability, drilling success rates, and access to capital.

The company's long-term success will also depend on its ability to manage operating costs, adapt to regulatory changes, and maintain a strong reserve base.

Competitive Position

The oil and natural gas industry is highly competitive. Energy 11, L.P. competes with numerous independent and major oil and natural gas companies to acquire properties, explore and develop reserves, and market oil and natural gas production. Competition is also intense for drilling rigs, equipment, qualified personnel, and access to capital.

Key competitive factors include:

• Access to Capital: The ability to secure financing for exploration and development activities.
• Technical Expertise: Proficiency in geological and geophysical analysis, drilling, and production techniques.
• Cost Efficiency: The ability to operate at lower costs than competitors.
• Access to Markets: Efficient transportation and sales channels for produced hydrocarbons.

Its competitive position likely stems from the quality of its reserve base, operational efficiency, and ability to manage costs within its primary operating area, the Sanish Field.

Key Risks for Investors

Every investment carries risks, and Energy 11, L.P. is no exception. These factors could significantly impact your investment:

• Commodity Price Volatility (High Impact): Energy 11, L.P.'s profitability and cash flow directly depend on the fluctuating prices of oil, natural gas, and NGLs. Prolonged low prices would severely reduce income and cash available for distributions.
• Illiquidity of Investment (Crucial for Retail Investors): No public stock market exists where you can easily buy or sell your units. This means your investment is highly illiquid, making it difficult to exit your position quickly or at a fair market price if needed. You might have to hold the investment for an extended period or sell at a significant discount.
• Drilling & Production Uncertainty: The company's business relies on successfully finding and extracting oil and gas. Drilling is inherently risky; wells may not produce as much as expected or may be dry, leading to significant financial losses and impacting reserve estimates.
• Reliance on Third-Party Operators & Infrastructure: Energy 11, L.P. often lacks full operational control over its properties, relying on third parties. It also depends on third-party pipelines and processing facilities to transport and sell its products. Issues with these third parties (e.g., operational failures, capacity constraints, increased costs) could disrupt sales and profitability.
• Debt-Funded Distributions: As mentioned, if the company funds distributions by debt rather than operational cash flow, it can weaken its financial position, increase leverage, and potentially jeopardize future distributions.
• Concentration Risk (Sanish Field): A significant portion of the company's operations and reserves appears concentrated in the Sanish Field. Any adverse events specific to this area (e.g., regulatory changes, environmental issues, unexpected geological problems, infrastructure disruptions) could disproportionately impact the entire company.
• Inflationary Pressures: Rising costs for equipment, labor, and services due to inflation can increase operating expenses and capital expenditures, eroding profits and cash flow.
• Regulatory & Environmental Risks: The oil and gas industry faces extensive and evolving environmental regulations. Changes in laws, increased compliance costs, or environmental liabilities could significantly impact operations and financial performance.

Conclusion

Energy 11, L.P. showed active development and reserve growth in 2024, followed by a slight reserve reduction in 2025 due to performance and price factors. Investors must carefully weigh the operational activities against the significant risks, particularly the illiquidity of the investment, the volatility of commodity prices, and the implications of debt-funded distributions. A thorough understanding of their financial statements (revenue, net income, cash flow, debt) is essential before making any investment decision.