Energy Resources 12 Net Loss Widens Amid Revenue Decline

TL;DR

**ENERGY RESOURCES 12 is bleeding cash and revenue, making it a risky bet as debt climbs and oil sales slump.**

AI Summary

ENERGY RESOURCES 12, L.P. reported a significant increase in net loss for the six months ended June 30, 2025, reaching $3,435,946, up from $2,541,031 in the prior year, representing a 35.2% increase. Total revenue declined by 19.6% to $14,279,170 for the six-month period, primarily driven by a 24.7% decrease in oil revenue to $11,563,315. Natural gas revenue, however, saw a substantial increase of 68.8% to $1,277,903. Operating costs and expenses decreased by 13.8% to $17,477,383, with production expenses falling by 21.4% to $7,145,603. The partnership's cash and cash equivalents significantly decreased from $1,463,582 at December 31, 2024, to $502,395 at June 30, 2025. A new revolving credit facility with BancFirst was established on May 2, 2024, with an initial borrowing base of $10 million, and outstanding borrowings increased to $6,400,000 as of June 30, 2025, from $4,600,000 at December 31, 2024. The partnership continues to operate 450 producing wells and two wells in various stages of drilling and completion in the Bakken Assets.

Why It Matters

This filing reveals a concerning trend for ENERGY RESOURCES 12, L.P., with widening net losses and declining revenues, particularly from oil sales, which could impact investor returns and future distributions. The increase in the revolving credit facility balance suggests a reliance on debt to manage operations, potentially increasing financial risk. For employees and customers, the operational stability of the partnership, a non-operated interest owner in the Bakken, is tied to the broader health of the oil and gas market and the performance of its third-party operators. In a competitive energy landscape, sustained losses could hinder the partnership's ability to invest in new development, affecting its long-term viability and market position.

Risk Assessment

Risk Level: high — The partnership's net loss increased by 35.2% to $3,435,946 for the six months ended June 30, 2025, while total revenue decreased by 19.6% to $14,279,170. Cash and cash equivalents plummeted by 65.7% from $1,463,582 to $502,395, and the revolving credit facility balance increased by $1,800,000 to $6,400,000, indicating significant liquidity and profitability challenges.

Analyst Insight

Investors should exercise extreme caution and consider divesting, given the substantial increase in net loss, significant revenue decline, and deteriorating cash position. The reliance on increased debt from the revolving credit facility to fund operations suggests a challenging financial outlook, making it a high-risk investment.

Financial Highlights

debt To Equity

N/A

revenue

$14,279,170

operating Margin

-22.4%

total Assets

N/A

total Debt

$6,400,000

net Income

-$3,435,946

eps

-$0.31

gross Margin

N/A

cash Position

$502,395

revenue Growth

-19.6%

Revenue Breakdown

Key Numbers

• $3,435,946 — Net loss for six months ended June 30, 2025 (Increased by 35.2% from $2,541,031 in 2024)
• $14,279,170 — Total revenue for six months ended June 30, 2025 (Decreased by 19.6% from $17,768,409 in 2024)
• $5,240,542 — Oil revenue for three months ended June 30, 2025 (Decreased from $8,152,941 in 2024)
• $502,395 — Cash and cash equivalents at June 30, 2025 (Decreased by 65.7% from $1,463,582 at December 31, 2024)
• $6,400,000 — Revolving credit facility balance at June 30, 2025 (Increased from $4,600,000 at December 31, 2024)
• 11,031,579 — Common units outstanding (Consistent across periods)
• $0.21 — Basic and diluted net loss per common unit for three months ended June 30, 2025 (Increased from $0.13 in 2024)
• $1,161,604 — Additions to oil and natural gas properties for six months ended June 30, 2025 (Increased from $1,011,975 in 2024)
• $7,072,147 — Distributions paid to limited partners for six months ended June 30, 2025 (Consistent with $7,072,146 in 2024)
• 450 — Producing wells in Bakken Assets (As of June 30, 2025)

Key Players & Entities

• ENERGY RESOURCES 12, L.P. (company) — Registrant
• BancFirst (company) — Lender for revolving credit facility
• North Dakota (regulator) — State asserting tax obligations
• Bakken Assets (company) — Primary oil and natural gas properties
• Energy Resources 12 GP, LLC (company) — General Partner of the Partnership

FAQ

Risk Factors

• Commodity Price Volatility [high — market]: The partnership's financial performance is highly sensitive to fluctuations in the market prices of oil and natural gas. A significant decrease in oil revenue by 24.7% in the six months ended June 30, 2025, highlights this vulnerability. Continued price declines could further impact revenues and profitability.
• Liquidity and Debt Facility [high — financial]: Cash and cash equivalents decreased substantially from $1,463,582 to $502,395. While a revolving credit facility of $10 million was established, outstanding borrowings increased to $6,400,000, indicating increased reliance on debt financing and potential pressure on liquidity.
• Reliance on Third-Party Operators [medium — operational]: The partnership operates as a non-operated working interest owner in the Bakken Assets, meaning it relies on third-party operators for the management and development of its wells. This dependence introduces operational risks related to the performance and decisions of these third parties.
• Environmental and Regulatory Compliance [medium — regulatory]: The oil and gas industry is subject to stringent environmental regulations. Changes in regulations or increased compliance costs could adversely affect the partnership's operations and financial results.

Industry Context

The oil and gas sector is characterized by significant price volatility driven by global supply and demand dynamics, geopolitical events, and economic conditions. Companies like Energy Resources 12, L.P., particularly those with non-operated interests, face challenges in managing operational costs and capital expenditures amidst fluctuating commodity prices. The industry is also increasingly focused on environmental, social, and governance (ESG) factors, which can influence investment and regulatory landscapes.

Regulatory Implications

The partnership operates within a heavily regulated industry. Changes in environmental regulations, tax policies, or permitting requirements at federal, state, or local levels could increase compliance costs or impact production. The SEC's oversight of financial reporting also necessitates adherence to strict disclosure standards.

What Investors Should Do

1. Monitor commodity price trends closely.
2. Assess the sustainability of current operations given declining cash reserves.
3. Evaluate the impact of increased debt on financial flexibility.

Key Dates

• 2025-06-30: End of Six-Month Period — Reporting period for the 10-Q, showing increased net loss and decreased revenue.
• 2025-05-02: Revolving Credit Facility Established — Provided access to $10 million in borrowing capacity, crucial for managing liquidity.
• 2024-12-31: End of Fiscal Year — Prior period financial position, showing higher cash reserves ($1,463,582) and lower credit facility balance ($4,600,000).

Glossary

Bakken Assets

The partnership's oil and natural gas properties located in North Dakota, primarily within the Bakken shale formation. (These assets are the sole source of the partnership's revenue and operational focus.)

Non-operated working interest

Ownership of a fractional interest in an oil or gas lease, where the owner does not have the right to manage and control the oil and gas operations. (Indicates the partnership relies on third-party operators for its Bakken Assets, introducing specific operational risks.)

Depreciation, depletion, amortization and accretion

Non-cash expenses that represent the reduction in the value of oil and gas properties over time due to extraction (depletion), wear and tear (depreciation), and other accounting adjustments (amortization and accretion). (A significant non-cash expense that impacts net loss but does not affect cash flow directly.)

Revolving credit facility

A type of credit facility that allows a borrower to draw down, repay, and redraw funds up to a certain limit during a specified period. (Represents a key source of short-term financing for the partnership, with increasing utilization.)

Year-Over-Year Comparison

Compared to the prior year's six-month period, Energy Resources 12, L.P. experienced a significant 19.6% decline in total revenue, primarily driven by a 24.7% drop in oil revenue, although natural gas revenue saw a substantial 68.8% increase. This revenue contraction, coupled with a 35.2% increase in net loss to $3,435,946, indicates a worsening financial performance. Operating costs and expenses also decreased by 13.8%, but not enough to offset the revenue decline. The partnership's cash position has deteriorated significantly, and its reliance on its revolving credit facility has increased.

Key Financial Figures

• $100,000 — time commitment and setup fees totaling $100,000 at closing. Total loan costs were appro
• $10 million — initial, and current, borrowing base is $10 million. The borrowing base is subject to redet

Filing Documents

• er12lp10q063025.htm (10-Q) — 508KB
• er12lpex10-1.htm (EX-10.1) — 39KB
• er12lpex31-1.htm (EX-31.1) — 17KB
• er12lpex31-2.htm (EX-31.2) — 17KB
• er12lpex32-1.htm (EX-32.1) — 6KB
• er12lpex32-2.htm (EX-32.2) — 6KB
• 0001185185-25-000956.txt ( ) — 2585KB
• energy12-20250630.xsd (EX-101.SCH) — 25KB
• energy12-20250630_cal.xml (EX-101.CAL) — 17KB
• energy12-20250630_def.xml (EX-101.DEF) — 112KB
• energy12-20250630_lab.xml (EX-101.LAB) — 199KB
• energy12-20250630_pre.xml (EX-101.PRE) — 118KB
• er12lp10q063025_htm.xml (XML) — 163KB

FINANCIAL

PART I. FINANCIAL INFORMATION Item 1. Consolidated Financial Statements (Unaudited) 3 Consolidated Balance Sheets – June 30, 2025 and December 31, 2024 3 Consolidated Statements of Operations – Three and six months ended June 30, 2025 and 2024 4 Consolidated Statements of Partners' Equity – Three and six months ended June 30, 2025 and 2024 5 Consolidated Statements of Cash Flows – Six months ended June 30, 2025 and 2024 6

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 7 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 13 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 20 Item 4.

Controls and Procedures

Controls and Procedures 20

OTHER

PART II. OTHER INFORMATION Item 1. Legal Proceeding 21 Item 1A.

Risk Factors

Risk Factors 21 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 21 Item 3. Defaults upon Senior Securities 21 Item 4. Mine Safety Disclosures 21 Item 5. Other Information 21 Item 6. Exhibits 21

Signatures

Signatures 22 Table of Contents PART I. FINANCIAL INFORMATION Item 1. Financial Statements Energy Resources 12, L.P. Consolidated Balance Sheets June 30, 2025 December 31, 2024 (unaudited) Assets Cash and cash equivalents $ 502,395 $ 1,463,582 Accounts receivable and other current assets 2,500,484 3,885,384 Total Current Assets 3,002,879 5,348,966 Oil and natural gas properties, successful efforts method, net of accumulated depreciation, depletion and amortization of $ 109,241,297 and 101,131,766 , respectively 149,461,424 156,140,235 Other assets, net - 13,276 Total Assets $ 152,464,303 $ 161,502,477 Liabilities Accounts payable and accrued expenses $ 1,604,592 $ 1,961,745 Total Current Liabilities 1,604,592 1,961,745 Revolving credit facility 6,400,000 4,600,000 Asset retirement obligations 782,514 765,443 Total Liabilities 8,787,106 7,327,188 Partners' Equity Limited partners' interest ( 11,031,579 common units issued and outstanding, respectively) 143,677,412 154,175,504 General partner's interest ( 215 ) ( 215 ) Total Partners' Equity 143,677,197 154,175,289 Total Liabilities and Partners' Equity $ 152,464,303 $ 161,502,477 See

notes to consolidated financial statements

notes to consolidated financial statements. 3 Table of Contents Energy Resources 12, L.P. Consolidated (Unaudited) Three Months Ended Three Months Ended Six months ended Six months ended June 30, 2025 June 30, 2024 June 30, 2025 June 30, 2024 Revenues Oil $ 5,240,542 8,152,941 11,563,315 15,346,456 Natural gas 494,493 203,219 1,277,903 756,904 Natural gas liquids 666,982 729,489 1,437,952 1,665,049 Total revenue 6,402,017 9,085,649 14,279,170 17,768,409 Operating costs and expenses Production expenses 3,271,318 4,769,531 7,145,603 9,085,958 Production taxes 470,285 873,381 1,028,732 1,545,922 General and administrative expenses 533,466 479,000 1,176,666 1,176,686 Depreciation, depletion, amortization and accretion 4,350,181 4,350,248 8,126,382 8,464,510 Total operating costs and expenses 8,625,250 10,472,160 17,477,383 20,273,076 Operating loss ( 2,223,233 ) ( 1,386,511 ) ( 3,198,213 ) ( 2,504,667 ) Interest expense, net ( 122,119 ) ( 41,053 ) ( 237,733 ) ( 36,364 ) Total other expense, net ( 122,119 ) ( 41,053 ) ( 237,733 ) ( 36,364 ) Net loss $ ( 2,345,352 ) $ ( 1,427,564 ) $ ( 3,435,946 ) $ ( 2,541,031 ) Basic and diluted net loss per common unit $ ( 0.21 ) $ ( 0.13 ) $ ( 0.31 ) $ ( 0.23 ) Weighted average common units outstanding - basic and diluted 11,031,579 11,031,579 11,031,579 11,031,579 See

notes to consolidated financial statements

notes to consolidated financial statements. 4 Table of Contents Energy Resources 12, L.P. Consolidated (Unaudited) Limited Partner General Partner Total Partners' Common Units Amount Amount Equity Balances - December 31, 2023 11,031,579 $ 173,241,229 $ ( 215 ) $ 173,241,014 Distributions declared and paid to common units ($ 0.320541 per common unit) - ( 3,536,073 ) - ( 3,536,073 ) - ( 673,623 ) - ( 673,623 ) Reversal of estimated state tax withholding for limited partners - 644,000 - 644,000 Net loss - three months ended March 31, 2024 - ( 1,113,467 ) - ( 1,113,467 ) Balances - March 31, 2024 11,031,579 168,562,066 ( 215 ) 168,561,851 Distributions declared and paid to common units ($ 0.320541 per common unit) - ( 3,536,073 ) ( 3,536,073 ) Net loss - three months ended June 30, 2024 - ( 1,427,564 ) ( 1,427,564 ) Balances - June 30, 2024 11,031,579 $ 163,598,429 $ ( 215 ) $ 163,598,214 Balances - December 31, 2024 11,031,579 $ 154,175,504 $ ( 215 ) $ 154,175,289 Distributions declared and paid to common units ($ 0.320541 per common unit) - ( 3,536,073 ) - ( 3,536,073 ) Net loss - three months ended March 31, 2025 - ( 1,090,594 ) - ( 1,090,594 ) Balances - March 31, 2025 11,031,579 149,548,837 ( 215 ) 149,548,622 Distributions declared and paid to common units ($ 0.320541 per common unit) ( 3,536,073 ) - ( 3,536,073 ) - ( 125,000 ) - ( 125,000 ) Reversal of estimated state tax withholding for limited partners - 135,000 - 135,000 Net loss - three months ended June 30, 2025 ( 2,345,352 ) ( 2,345,352 ) Balances - June 30, 2025 11,031,579 $ 143,677,412 $ ( 215 ) $ 143,677,197 See

notes to consolidated financial statements

notes to consolidated financial statements. 5 Table of Contents Energy Resources 12, L.P. Consolidated (Unaudited) Six months ended Six months ended June 30, 2025 June 30, 2024 Cash flow from operating activities: Net loss $ ( 3,435,946 ) $ ( 2,541,031 ) Adjustments to reconcile net loss to cash from operating activities: Depreciation, depletion, amortization and accretion 8,126,382 8,464,510 Changes in operating assets and liabilities: Accounts receivable and other current assets 1,398,176 498,681 Accounts payable and accrued expenses ( 491,048 ) ( 980,604 ) Net cash flow provided by operating activities 5,597,564 5,441,556 Cash flow from investing activities: Additions to oil and natural gas properties ( 1,161,604 ) ( 1,011,975 ) Net cash flow used in investing activities ( 1,161,604 ) ( 1,011,975 ) Cash flow from financing activities: Cash paid for loan costs - ( 138,271 ) Proceeds from revolving credit facility 1,800,000 2,700,000 Payments for state withholding taxes on behalf of limited partners ( 125,000 ) - Distributions paid to limited partners ( 7,072,147 ) ( 7,072,146 ) Net cash flow used in financing activities ( 5,397,147 ) ( 4,510,417 ) Decrease in cash and cash equivalents ( 961,187 ) ( 80,836 ) Cash and cash equivalents, beginning of period 1,463,582 1,455,619 Cash and cash equivalents, end of period $ 502,395 $ 1,374,783 Interest paid $ 191,400 $ - Supplemental non-cash information: Accrued capital expenditures related to additions to oil and natural gas properties $ 498,703 $ 1,118,871 See

notes to consolidated financial statements

notes to consolidated financial statements. 6 Table of Contents Energy Resources 12, L.P. Notes to Consolidated Financial Statements June 30, 2025 (Unaudited) Note 1. Partnership Organization Energy Resources 12, L.P. (together with its wholly-owned subsidiary, the "Partnership") is a Delaware limited partnership formed to acquire producing and non-producing oil and natural gas properties onshore in the United States and to develop those properties. The initial capitalization of the Partnership of $ 1,000 occurred on December 30, 2016. The Partnership completed its best-efforts offering in October 2019 with a total of approximately 11.0 million common units sold for gross proceeds of $ 218.0 million and proceeds net of offering costs of $ 204.3 million. As of June 30, 2025, the Partnership owned an approximate 5 % non-operated working interest in 450 producing wells, predominantly in McKenzie, Dunn, McLean and Mountrail counties of North Dakota (collectively, the "Bakken Assets"). The Partnership also owns an estimated approximate 5 % non-operated working interest in two wells in various stages of the drilling and completion process, and possible future development locations in the Bakken Assets. The Bakken Assets, which are a part of the Bakken shale formation in the Greater Williston Basin, are operated by third-party operators on behalf of the Partnership and other working interest owners. The general partner of the Partnership is Energy Resources 12 GP, LLC (the "General Partner"). The General Partner manages and controls the business affairs of the Partnership. The Partnership's fiscal year ends on December 31. Note 2. Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited financial statements have been prepared in accordance with the instructions for Article 10 of SEC Regulation S-X. Accordingly, they do not include all of the information required by generally accepted accounting principles ("GAAP

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