Energy Resources 12's Net Loss Widens Amidst Revenue Decline

TL;DR

**Sell now; this oil and gas partnership is bleeding cash and revenue, with no clear path to profitability.**

AI Summary

Energy Resources 12, L.P. reported a significant increase in net loss for the nine months ended September 30, 2025, reaching $6,187,442, a substantial rise from the $3,323,388 net loss in the same period of 2024. Total revenue declined by 27.4% to $20,289,153 for the nine months ended September 30, 2025, down from $27,999,459 in 2024, primarily due to a 32.1% decrease in oil revenue from $24,338,597 to $16,526,063. Operating costs and expenses also decreased by 16.4% to $26,093,064, driven by lower production expenses and depreciation. The Partnership's cash and cash equivalents decreased to $873,459 as of September 30, 2025, from $1,463,582 at December 31, 2024. A key business change was the amendment of its revolving credit facility on August 8, 2025, extending its maturity to March 1, 2027, and setting the borrowing base at $10,000,000. Risks include continued reliance on third-party operators for its Bakken Assets and potential fluctuations in commodity prices. The strategic outlook involves managing its existing non-operated working interest in 450 producing wells and two wells in progress in the Bakken Assets.

Why It Matters

This widening net loss and declining revenue signal significant headwinds for Energy Resources 12, L.P., impacting investor confidence and potentially future distributions. The company's reliance on non-operated interests in the Bakken Assets means its performance is heavily tied to commodity prices and third-party operational efficiency, placing it at a competitive disadvantage compared to integrated operators. For employees, sustained losses could lead to operational cutbacks, while customers might see reduced supply if production becomes uneconomical. The broader market will watch how smaller, non-operated entities navigate volatile energy markets, setting a precedent for similar partnerships.

Risk Assessment

Risk Level: high — The Partnership's net loss more than doubled to $6,187,442 for the nine months ended September 30, 2025, from $3,323,388 in the prior year, indicating deteriorating financial health. Total revenue decreased significantly by 27.4% to $20,289,153, primarily due to a 32.1% drop in oil revenue, highlighting vulnerability to commodity price fluctuations. Furthermore, cash and cash equivalents declined by 40.4% from $1,463,582 at December 31, 2024, to $873,459 at September 30, 2025, signaling liquidity concerns.

Analyst Insight

Investors should consider divesting from Energy Resources 12, L.P. given the substantial increase in net loss and declining revenues. The partnership's high reliance on volatile commodity prices and non-operated assets presents significant unmitigated risks. Reallocate capital to more financially stable and diversified energy investments.

Financial Highlights

debt To Equity

0.05

revenue

$20,289,153

operating Margin

-28.6%

total Assets

$148,613,482

total Debt

$6,591,120

net Income

$-6,187,442

eps

$-0.56

gross Margin

N/A

cash Position

$873,459

revenue Growth

-27.4%

Revenue Breakdown

Key Numbers

• $6,187,442 — Net Loss (for the nine months ended September 30, 2025, up from $3,323,388 in 2024)
• $20,289,153 — Total Revenue (for the nine months ended September 30, 2025, down from $27,999,459 in 2024)
• $16,526,063 — Oil Revenue (for the nine months ended September 30, 2025, down from $24,338,597 in 2024)
• $873,459 — Cash and Cash Equivalents (as of September 30, 2025, down from $1,463,582 at December 31, 2024)
• $10,000,000 — Revolving Credit Facility Borrowing Base (as of August 8, 2025)
• 11,031,579 — Common Units Outstanding (as of November 13, 2025)
• 27.4% — Revenue Decrease (for the nine months ended September 30, 2025, compared to 2024)
• 32.1% — Oil Revenue Decrease (for the nine months ended September 30, 2025, compared to 2024)
• 40.4% — Cash and Cash Equivalents Decrease (from December 31, 2024, to September 30, 2025)

Key Players & Entities

• ENERGY RESOURCES 12, L.P. (company) — registrant
• BancFirst (company) — Lender for revolving credit facility
• Energy Resources 12 GP, LLC (company) — General Partner of the Partnership
• North Dakota (regulator) — state asserting tax obligations
• McKenzie, Dunn, McLean and Mountrail counties (location) — primary location of Bakken Assets
• Bakken Assets (asset) — oil and natural gas properties
• Chief Executive Officer (person) — Chief Operating Decision Maker (CODM)
• Financial Accounting Standards Board (regulator) — issued ASU No. 2024-03

FAQ

Risk Factors

• Reliance on Third-Party Operators [medium — operational]: The Partnership relies on third-party operators for its Bakken Assets, which consist of a 5% non-operated working interest in 450 producing wells. This reliance introduces operational risks as the Partnership has limited control over the day-to-day management and operational decisions of these assets.
• Commodity Price Volatility [high — market]: The Partnership's financial performance is highly sensitive to fluctuations in oil and natural gas prices. A significant decrease in oil revenue by 32.1% for the nine months ended September 30, 2025, highlights this vulnerability.
• Declining Cash Position [medium — financial]: Cash and cash equivalents decreased by 40.4% from $1,463,582 at December 31, 2024, to $873,459 as of September 30, 2025. This reduction in liquidity could impact the Partnership's ability to meet its financial obligations or fund future operations.
• Increasing Net Loss [high — financial]: The net loss for the nine months ended September 30, 2025, more than doubled to $6,187,442 from $3,323,388 in the same period of 2024, indicating deteriorating profitability.
• Revolving Credit Facility [medium — financial]: The Partnership has a revolving credit facility with a borrowing base of $10,000,000, extended to March 1, 2027. While this provides some financial flexibility, the outstanding balance of $5,800,000 as of September 30, 2025, represents a significant portion of the available credit.

Industry Context

The oil and gas industry 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 in mature basins like the Bakken, face challenges in managing production costs and maintaining profitability amidst fluctuating commodity prices.

Regulatory Implications

While no specific regulatory changes are detailed, the Partnership operates under environmental regulations related to oil and gas extraction and production. Compliance with these regulations is essential, and any new or stricter rules could impact operating costs and the feasibility of future development.

What Investors Should Do

1. Monitor commodity price trends
2. Assess operational efficiency of Bakken Assets
3. Evaluate cash flow generation and liquidity
4. Review credit facility terms and utilization

Key Dates

• 2025-09-30: Nine months ended September 30, 2025 — Reported a significant increase in net loss and a substantial decrease in total revenue, primarily driven by lower oil prices and production.
• 2025-08-08: Amendment of revolving credit facility — Extended maturity to March 1, 2027, and set borrowing base at $10,000,000, providing continued access to liquidity.
• 2025-09-30: Consolidated Balance Sheet Date — Showed a decrease in cash and cash equivalents to $873,459 from $1,463,582 at year-end 2024.
• 2024-12-31: Year-end 2024 — Previous period's financial results for comparison, with higher revenue and lower net loss.

Glossary

Bakken Assets

Refers to the Partnership's non-operated working interest in oil and natural gas properties located in North Dakota, primarily within the Bakken shale formation. (These are the core assets of the Partnership, and their performance directly impacts revenues and profitability.)

Non-operated working interest

An ownership stake in an oil or gas property where the owner shares in the costs and revenues but does not manage the day-to-day operations. (Highlights the Partnership's reliance on third-party operators for its Bakken Assets, a key risk factor.)

Depreciation, depletion and amortization

Accounting methods used to allocate the cost of tangible assets (depreciation), natural resource assets (depletion), and intangible assets (amortization) over their useful lives. (A significant operating expense that reduces the carrying value of the Partnership's oil and natural gas properties.)

Revolving credit facility

A type of credit line that allows a company to borrow, repay, and re-borrow funds up to a certain limit over a specified period. (Provides the Partnership with access to capital, with its terms and borrowing base being critical for financial flexibility.)

Borrowing base

The maximum amount a borrower can draw on a revolving credit facility, typically determined by the value of the collateral pledged. (Sets the limit on the Partnership's ability to borrow under its credit facility.)

Year-Over-Year Comparison

Compared to the prior year's nine-month period, Energy Resources 12, L.P. experienced a significant downturn. Total revenue decreased by 27.4% to $20,289,153, largely due to a 32.1% drop in oil revenue. This revenue decline, coupled with operating costs that decreased at a slower pace (16.4%), led to a substantial increase in the net loss, which more than doubled from $3,323,388 to $6,187,442. The Partnership's cash reserves also diminished by 40.4%.

Filing Documents

• eres20250930_10q.htm (10-Q) — 662KB
• ex_860338.htm (EX-31.1) — 13KB
• ex_860339.htm (EX-31.2) — 13KB
• ex_860340.htm (EX-32.1) — 5KB
• ex_860341.htm (EX-32.2) — 5KB
• 0001437749-25-034722.txt ( ) — 2897KB
• eres-20250930.xsd (EX-101.SCH) — 28KB
• eres-20250930_cal.xml (EX-101.CAL) — 17KB
• eres-20250930_def.xml (EX-101.DEF) — 200KB
• eres-20250930_lab.xml (EX-101.LAB) — 185KB
• eres-20250930_pre.xml (EX-101.PRE) — 214KB
• eres20250930_10q_htm.xml (XML) — 222KB

FINANCIAL INFORMATION

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

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

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements Energy Resources 12, L.P. Consolidated Balance Sheets September 30, 2025 December 31, 2024 (unaudited) Assets Cash and cash equivalents $ 873,459 $ 1,463,582 Accounts receivable and other current assets 2,419,650 3,885,384 Total Current Assets 3,293,109 5,348,966 Oil and natural gas properties, successful efforts method, net of accumulated depreciation, depletion and amortization of $ 113,553,300 and 101,131,766 , respectively 145,293,381 156,140,235 Other assets, net 26,992 13,276 Total Assets $ 148,613,482 $ 161,502,477 Liabilities Accounts payable and accrued expenses $ 1,096,661 $ 1,961,745 Total Current Liabilities 1,096,661 1,961,745 Revolving credit facility 5,800,000 4,600,000 Asset retirement obligations 791,120 765,443 Total Liabilities 7,687,781 7,327,188 Partners' Equity Limited partners' interest ( 11,031,579 common units issued and outstanding, respectively) 140,925,916 154,175,504 General partner's interest ( 215 ) ( 215 ) Total Partners' Equity 140,925,701 154,175,289 Total Liabilities and Partners' Equity $ 148,613,482 $ 161,502,477 See notes to consolidated financial statements. 3 Table of Contents Energy Resources 12, L.P. Consolidated Statements of Operations (Unaudited) Three Months Ended Three Months Ended Nine Months Ended Nine Months Ended September 30, 2025 September 30, 2024 September 30, 2025 September 30, 2024 Revenues Oil $ 4,962,748 8,992,141 16,526,063 24,338,597 Natural gas 403,486 335,444 1,681,389 1,092,348 Natural gas liquids 643,749 903,465 2,081,701 2,568,514 Total revenue 6,009,983 10,231,050 20,289,153 27,999,459 Operating costs and expenses Production expenses 3,389,088 4,468,955 10,534,691 13,554,913 Production taxes 407,333 730,560 1,436,065 2,276,482 General and administrative expenses 498,651 496,225 1,675,317 1,672,911 Depreciation, depletion, amortization and accretion 4,320,609 5,2

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements September 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 September 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") in the United States for complete financial statements. In the opinion of management

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