Phoenix Energy One, LLC Investment Guide: What You Need to Know

Thinking about investing in Phoenix Energy One, LLC? It is exciting to get in on the ground floor, but it is important to look past the marketing. Before you commit your money, let’s break down what this company is actually doing.

Important Note: This is not a typical stock offering where you buy ownership in the company. Instead, they are selling "Phoenix Flex Junior Secured Notes." Think of this as loaning the company money in exchange for interest payments, rather than buying a slice of the business that grows in value.

1. What are you actually buying?

You are acting as a lender. The company promises to pay you 6.00% to 7.00% interest per year over a 10-year period. You can choose to receive cash monthly or let your interest grow (compound) over time. These notes are unsecured debts of the parent company, Phoenix Energy One, LLC.

2. How do they make money?

Phoenix Energy One focuses on the oil and gas industry through a three-part strategy:

• Direct Drilling: They drill their own wells. They have moved from buying rights to oil to owning the rigs and doing the work themselves.
• Royalty Assets: They buy the rights to a portion of the money made from wells owned by others.
• Non-Operated Interests: They buy stakes in projects run by other companies.

They have grown quickly, moving from under 0.2 million barrels of oil equivalent in 2020 to over 9.9 million in 2025. They use custom software to track sales, which they view as a competitive advantage, though they do not own any patents on it. Revenue comes primarily from selling oil and natural gas, which means your returns are tied to volatile market prices.

3. The "Big Shift" and Your Money

The company is in a major growth phase. They need to raise about $147.3 million in 2026 to keep their plans on track. They are using the money from these notes to fund this expansion. Essentially, they are borrowing from you to pay for the equipment, labor, and leases needed to drill their own wells.

4. The "Pecking Order" of Debt

You are not the only one the company owes money to. They have major agreements with firms like Fortress and Adamantium. These are "Senior Debt." If the company runs into financial trouble, these lenders get paid back before you see a dime.

Your notes are also "structurally subordinated." You are lending to the parent company, but the actual assets (the wells) are held by smaller subsidiaries. Those subsidiaries must pay their own debts and bills first. You are at the back of the line, behind the company’s senior lenders and the subsidiaries' creditors.

5. The "Catch" with getting your money back

• No Public Market: You cannot easily sell these notes. There is no stock market to trade them on.
• The 10% Limit: If you want your money back early, you must ask the company to buy back your notes. They limit these buybacks to 10% of the total notes per quarter. If too many people want out at once, you might be stuck waiting.
• No Guarantees: The company may not have the cash to pay you back when you ask. Buybacks are entirely at the company’s discretion and depend on their available cash.

6. Important Risks to Consider

• Family Control: The Ferrari family holds the strings. While Adam Ferrari is the CEO, his parents (Daniel and Charlene) control the voting rights. You have no say in how the company is run.
• No Insurance: These notes are not like bank CDs; they are not insured by the FDIC. If the company fails, you could lose your entire investment.
• Fees: The company pays commissions to brokers to sell these notes. A portion of your investment goes toward sales costs rather than energy projects.
• Operational Risk: Because the company is shifting toward direct drilling, they face risks like cost overruns and mechanical failures. These risks may impact their ability to generate the cash needed to pay your interest.

Final Advice for Potential Investors: Before you sign anything, ask yourself: Am I comfortable being a lender to a private company where I have no say, no insurance, and limited ways to get my money back if I need it?

If you are still interested, take the time to read the official "Prospectus" filed with the SEC on June 25, 2026. It contains the fine print that could be the difference between a successful investment and a total loss.

Disclaimer: I am an AI, not a financial advisor. This is a debt investment, not a stock purchase. It carries significant risks, including the potential loss of your entire principal.